Moody's Says Proposed Offer By Liberty Media To Increase Its Ownership Of Sirius XM To 100% Is Credit Negative
January 8, 2014 at 6:31 AM (PT)
As ALL ACCESS reported last week (NET NEWS 1/3), LIBERTY MEDIA has proposed a plan to make SIRIUSXM RADIO a wholly-owned subsidiary of LIBERTY.
Today (1/8), MOODY'S INVESTORS SERVICE said SIRIUSXM's Board of Directors has received "a non-binding letter from LIBERTY MEDIA CORP. proposing a transaction to convert all outstanding shares of common stock of SIRIUS not owned by LIBERTY MEDIA into the right to receive 0.0760 of new, non-voting shares of LIBERTY Series C common stock. Immediately prior to a conversion, LIBERTY would distribute shares of LIBERTY's Series C common stock to all holders of record of LIBERTY's Series A and B common stock on a 2:1 basis. Upon the completion of the proposed transaction, SIRIUS public stockholders would own roughly 39% of LIBERTY's total equity market cap."
MOODY'S also notes that, "a Special Committee of independent directors of SIRIUS will be formed to consider LIBERTY's proposal. The transaction is conditioned on the approval of both the Special Committee and more than 50% of the minority public shareholders of SIRIUS. Assuming the proposed transaction is approved, SIRIUS would become a wholly-owned subsidiary under LIBERTY. MOODY'S views this transaction as credit negative given the potential for additional debt to be issued by SIRIUS, or a new holding company of SIRIUS, with proceeds to fund investments of LIBERTY. Management of LIBERTY has stated that it views SIRIUS as being under-levered and could be more aggressive with its capital structure."