| Debt |
Debt
Our debt as of March 31, 2014 and December 31, 2013 consisted of the following:
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Carrying value at |
Issuer / Borrower |
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Issued |
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Debt |
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Maturity Date |
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Interest Payable |
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Principal Amount |
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March 31, 2014 |
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December 31, 2013 |
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Sirius XM
(a)(b)
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August 2008 |
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7% Exchangeable
Senior Subordinated Notes (the "Exchangeable Notes") |
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December 1, 2014 |
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semi-annually on June 1 and December 1 |
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$ |
502,370 |
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$ |
500,979 |
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$ |
500,481 |
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Sirius XM
(a)(c) |
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May 2013 |
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4.25% Senior Notes
(the "4.25% Notes")
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May 15, 2020 |
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semi-annually on May 15 and November 15 |
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500,000 |
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494,986 |
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494,809 |
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Sirius XM
(a)(c) |
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September 2013 |
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5.875% Senior Notes
(the "5.875% Notes")
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October 1, 2020 |
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semi-annually on April 1 and October 1 |
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650,000 |
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643,128 |
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642,914 |
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Sirius XM
(a)(c) |
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August 2013 |
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5.75% Senior Notes
(the "5.75% Notes")
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August 1, 2021 |
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semi-annually on February 1 and August 1 |
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600,000 |
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594,644 |
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594,499 |
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Sirius XM
(a)(c)(d) |
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August 2012 |
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5.25% Senior Secured Notes (the "5.25% Notes") |
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August 15, 2022 |
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semi-annually on February 15 and August 15 |
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400,000 |
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394,770 |
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394,648 |
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Sirius XM
(a)(c) |
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May 2013 |
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4.625% Senior Notes
(the "4.625% Notes")
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May 15, 2023 |
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semi-annually on May15 and November 15 |
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500,000 |
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494,767 |
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494,653 |
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Sirius XM
(e) |
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December 2012 |
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Senior Secured Revolving Credit Facility (the "Credit Facility") |
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December 5, 2017 |
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variable fee paid quarterly |
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1,250,000 |
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310,000 |
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460,000 |
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Sirius XM |
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Various |
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Capital leases |
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Various |
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n/a |
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n/a |
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18,414 |
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19,591 |
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Total Debt |
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3,451,688 |
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3,601,595 |
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Less: total current maturities (f) |
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508,486 |
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507,774 |
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Total long-term debt |
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$ |
2,943,202 |
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$ |
3,093,821 |
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(a) |
The carrying value of the notes are net of the remaining unamortized original issue discount. |
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(b) |
Sirius XM and Holdings are co-obligors with respect to the Exchangeable Notes. The Exchangeable Notes are senior subordinated obligations and rank junior in right of payment to our existing and future senior debt and equally in right of payment with our existing and future senior subordinated debt. Substantially all of our domestic wholly-owned subsidiaries guarantee our obligations under these notes on a senior subordinated basis. The Exchangeable Notes are exchangeable at any time at the option of the holder into shares of our common stock at an exchange rate of 543.1372 shares of common stock per $1,000 principal amount of the notes, which is equivalent to an approximate exchange price of $1.841 per share of common stock. During the three months ended March 31, 2014 and 2013, the common stock reserved for conversion in connection with the Exchangeable Notes was considered to be anti-dilutive in our calculation of diluted net income per share.
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(c) |
Substantially all of our domestic wholly-owned subsidiaries have guaranteed these notes. |
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(d) |
On April 10, 2014, we entered into a supplemental indenture to the indenture governing the 5.25% Notes pursuant to which we agreed to grant a first priority lien on substantially all of the assets of Sirius XM and the guarantors to the holders of the Notes. The liens securing the 5.25% Notes are equal and ratable to the liens granted over such assets to secure the Credit Facility. |
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(e) |
In December 2012, Sirius XM entered into a five-year Credit Facility with a syndicate of financial institutions for $1,250,000. Sirius XM's obligations under the Credit Facility are guaranteed by certain of its material domestic subsidiaries and are secured by a lien on substantially all of Sirius XM's assets and the assets of its material domestic subsidiaries. Borrowings under the Credit Facility are used for working capital and other general corporate purposes, including dividends, financing of acquisitions and share repurchases. Interest on borrowings is payable on a quarterly 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 and is payable on a quarterly basis. The variable rate for the Credit Facility was 0.35% per annum as of March 31, 2014. As of March 31, 2014, $940,000 was available for future borrowing under the Credit Facility. Sirius XM's outstanding borrowings under the Credit Facility are classified as Long-term debt within our unaudited consolidated balance sheets as of March 31, 2014 due to the long-term maturity of this debt.
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(f) |
This balance includes $10,970 and $10,959 in related party current maturities as of March 31, 2014 and December 31, 2013, respectively.
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The following table reconciles total current debt held at Holdings to the total current and long-term debt held at Sirius XM as of March 31, 2014 and December 31, 2013:
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Carrying value at |
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March 31, 2014 |
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December 31, 2013 |
Total current debt at Holdings |
$ |
508,486 |
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$ |
507,774 |
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Fair value in excess of carrying value associated with the Exchangeable Notes (a)
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389,427 |
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466,815 |
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Total current debt at Sirius XM |
$ |
897,913 |
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$ |
974,589 |
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Total long-term debt |
$ |
2,943,202 |
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$ |
3,093,821 |
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Total debt at Sirius XM |
$ |
3,841,115 |
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$ |
4,068,410 |
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(a)
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In connection with our corporate reorganization in November 2013, the Exchangeable Notes were amended such that the settlement of the conversion feature is into shares of Holdings' common stock and Holdings and Sirius XM became co-obligors with respect to the Exchangeable Notes. The fair value of the Exchangeable Notes in excess of the carrying amount is recorded to Sirius XM's unaudited consolidated balance sheets in Current maturities of long-term debt. Changes in fair value are recorded in Gain on change in fair value of debt instruments within Sirius XM's unaudited consolidated statements of comprehensive income. We recognized $89,110 to Gain on change in fair value of debt instruments during the three months ended March 31, 2014. The fair value in excess of the carrying value of this instrument is eliminated in Holdings' unaudited consolidated balance sheets and unaudited statements of comprehensive income.
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Covenants and Restrictions
The Exchangeable Notes require compliance with certain covenants that restrict Holdings' and Sirius XM's ability to, among other things, (i) enter into certain transactions with affiliates and (ii) merge or consolidate with another person.
Under the Credit Facility, Sirius XM must comply with a debt maintenance covenant that it not exceed a total leverage ratio, calculated as total consolidated 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 for our other 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 4.25% Notes, 4.625% Notes, 5.75% Notes and 5.875% Notes are also subject to 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 our 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.
At March 31, 2014 and December 31, 2013, we were in compliance with our debt covenants.
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