Annual report pursuant to Section 13 and 15(d)

Debt

v3.20.4
Debt
 12 Months Ended
Dec. 31, 2020
Debt Disclosure [Abstract]  
Debt Debt
Our debt as of December 31, 2020 and December 31, 2019 consisted of the following:
           
Carrying value(a) at
Issuer / Borrower Issued Debt Maturity Date Interest Payable Principal Amount at December 31, 2020 December 31, 2020 December 31, 2019
Pandora
(b) (c) (h)		 December 2015
1.75% Convertible Senior Notes
 December 1, 2020 semi-annually on June 1 and December 1 $ —  $ —  $ 1 
Sirius XM
(d)		 July 2017
3.875% Senior Notes
 August 1, 2022 semi-annually on February 1 and August 1 1,000  997  995 
Sirius XM
(d) (g)		 May 2013
4.625% Senior Notes
 May 15, 2023 semi-annually on May 15 and November 15 —  —  498 
Pandora
(b) (e)		 June 2018
1.75% Convertible Senior Notes
 December 1, 2023 semi-annually on June 1 and December 1 193  170  163 
Sirius XM
(d)		 July 2019
4.625% Senior Notes
 July 15, 2024 semi-annually on January 15 and July 15 1,500  1,488  1,485 
Sirius XM
(d) (g)		 March 2015
5.375% Senior Notes
 April 15, 2025 semi-annually on April 15 and October 15 —  —  993 
Sirius XM
(d)		 May 2016
5.375% Senior Notes
 July 15, 2026 semi-annually on January 15 and July 15 1,000  993  992 
Sirius XM
(d)		 July 2017
5.00% Senior Notes
 August 1, 2027 semi-annually on February 1 and August 1 1,500  1,490  1,488 
Sirius XM
(d)		 June 2019
5.500% Senior Notes
 July 1, 2029 semi-annually on January 1 and July 1 1,250  1,237  1,236 
Sirius XM
(d)		 June 2020
4.125% Senior Notes
 July 1, 2030 semi-annually on January 1 and July 1 1,500  1,484  — 
Sirius XM
(f)		 December 2012 Senior Secured Revolving Credit Facility (the "Credit Facility") June 29, 2023 variable fee paid quarterly 649  649  — 
Sirius XM Various Finance leases Various  n/a  n/a 1  2 
Total Debt 8,509  7,853 
Less: total current maturities 1  2 
Less: total deferred financing costs 9  9 
Total long-term debt $ 8,499  $ 7,842 
(a)The carrying value of the obligations is net of any remaining unamortized original issue discount.
(b)Holdings has unconditionally guaranteed all of the payment obligations of Pandora under these notes.
(c)We acquired $152 in principal amount of the 1.75% Convertible Senior Notes due 2020 as part of the Pandora Acquisition. On February 14, 2019, Pandora announced a tender offer to repurchase for cash any and all of its outstanding 1.75% Convertible Senior Notes due 2020 at a price equal to 100% of the aggregate principal amount thereof plus accrued and unpaid interest thereon to, but not including, the repurchase date. On March 18, 2019, we purchased $151 in aggregate principal amount of the 1.75% Convertible Senior Notes due 2020 that had been validly tendered and not validly withdrawn in the repurchase offer. We recorded a $1 Loss on extinguishment of debt in connection with this transaction. In addition, we unwound a capped call security acquired as part of the Pandora Acquisition in March 2019 for $3.
(d)All material domestic subsidiaries, including Pandora and its subsidiaries, that guarantee the Credit Facility have guaranteed these notes.
(e)We acquired $193 in principal amount of the 1.75% Convertible Senior Notes due 2023 as part of the Pandora Acquisition. We allocate the principal amount of the 1.75% Convertible Senior Notes due 2023 between the liability and equity components. The value assigned to the debt components of the 1.75% Convertible Senior Notes due 2023 is the estimated fair value as of the issuance date of similar debt without the conversion feature. The difference between the fair value of the debt and this estimated fair value represents the value which has been assigned to the equity component. The equity component is recorded to additional paid-in capital and is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the Notes
over the carrying amount of the liability component is recorded as a debt discount and is being amortized to interest expense using the effective interest method through the December 1, 2023 maturity date. The 1.75% Convertible Senior Notes due 2023 were not convertible into common stock and not redeemable as of December 31, 2020. As a result, we have classified the debt as Long-term within our consolidated balance sheets.
(f)The $1,750 Credit Facility expires in June 2023. Sirius XM's obligations under the Credit Facility are guaranteed by certain of its material domestic subsidiaries, including Pandora and its subsidiaries, and are secured by a lien on substantially all of Sirius XM's assets and the assets of its material domestic subsidiaries.  Interest on borrowings is payable on a monthly basis and accrues at a rate based on LIBOR plus an applicable rate.  Sirius XM is also required to pay a variable fee on the average daily unused portion of the Credit Facility which is payable on a quarterly basis.  The variable rate for the unused portion of the Credit Facility was 0.25% per annum as of December 31, 2020.  All of Sirius XM's outstanding borrowings under the Credit Facility are classified as Long-term debt within our consolidated balance sheets due to the long-term maturity of this debt. Additionally, the amount available for future borrowing under the Credit Facility is reduced by letters of credit issued for the benefit of Pandora, which were $1 as of December 31, 2020.
(g)On July 9, 2020, Sirius XM redeemed $500 in outstanding principal amount of the 4.625% Senior Notes due 2023 for an aggregate purchase price, including premium and interest, of $507. On July 9, 2020, Sirius XM also redeemed $1,000 in outstanding principal amount of the 5.375% Senior Notes due 2025 for an aggregate purchase price, including premium and interest, of $1,039. Sirius XM used the proceeds from the 4.125% Senior Notes due 2030 for both redemptions. During the year ended December 31, 2020, we recognized $40 to Loss on extinguishment of debt, consisting primarily of unamortized discount, deferred financing fees and redemption premium, as a result of these redemptions.
(h)On December 1, 2020, the 1.75% Convertible Senior Notes due 2020 were paid at their stated maturity.

Covenants and Restrictions
Under the Credit Facility, Sirius XM, our wholly owned subsidiary, must comply with a debt maintenance covenant that it cannot exceed a total leverage ratio, calculated as consolidated total debt to consolidated operating cash flow, of 5.0 to 1.0.  The Credit Facility generally requires compliance with certain covenants that restrict Sirius XM's ability to, among other things, (i) incur additional indebtedness, (ii) incur liens, (iii) pay dividends or make certain other restricted payments, investments or acquisitions, (iv) enter into certain transactions with affiliates, (v) merge or consolidate with another person, (vi) sell, assign, lease or otherwise dispose of all or substantially all of Sirius XM's assets, and (vii) make voluntary prepayments of certain debt, in each case subject to exceptions.
The indentures governing Sirius XM's notes restrict Sirius XM's non-guarantor subsidiaries' ability to create, assume, incur or guarantee additional indebtedness without such non-guarantor subsidiary guaranteeing each such series of notes on a pari passu basis.  The indentures governing the notes also contain covenants that, among other things, limit Sirius XM's ability and the ability of its subsidiaries to create certain liens; enter into sale/leaseback transactions; and merge or consolidate.
Under Sirius XM's debt agreements, the following generally constitute an event of default: (i) a default in the payment of interest; (ii) a default in the payment of principal; (iii) failure to comply with covenants; (iv) failure to pay other indebtedness after final maturity or acceleration of other indebtedness exceeding a specified amount; (v) certain events of bankruptcy; (vi) a judgment for payment of money exceeding a specified aggregate amount; and (vii) voidance of subsidiary guarantees, subject to grace periods where applicable.  If an event of default occurs and is continuing, our debt could become immediately due and payable.
The indentures governing the Pandora Convertible Notes contain covenants that limit Pandora’s ability to merge or consolidate and provide for customary events of default, which include nonpayment of principal or interest, breach of covenants, payment defaults or acceleration of other indebtedness and certain events of bankruptcy.
At December 31, 2020 and December 31, 2019, we were in compliance with our debt covenants.
Pandora Convertible Notes
Pandora's 1.75% Convertible Senior Notes due 2023 (the “Pandora 2023 Notes”) are unsecured, senior obligations of Pandora. Holdings has guaranteed the payment and performance obligations of Pandora under the Pandora 2023 Notes and the indenture governing the Pandora 2023 Notes.
The Pandora 2023 Notes will mature on December 1, 2023, unless earlier repurchased or redeemed by Pandora or converted in accordance with their terms. As of December 31, 2020, the conversion rate applicable to the Pandora 2023 Notes
was 151.9533 shares of Holdings' common stock per one thousand principal amount of the Pandora 2023 Notes plus carryforward adjustments not yet effected pursuant to the terms of the indenture governing the Pandora 2023 Notes.