SiriusXM Canada Plans To Go Private
May 13, 2016 at 4:25 AM (PT)
SIRIUSXM CANADA has announced the details of its plan to take the company private after its board unanimously approved the proposed transaction. Under the deal, shareholders of the present SIRIUSXM CANADA will be bought out with C$4.50 in cash, shares of SIRIUSXM common stock, a security exchangeable for shares of SIRIUSXM common stock, or a combination thereof.
The deal will leave SIRIUSXM CANADA with voting control; SLAIGHT COMMUNICATIONS and OBELYSK MEDIA will together own 67% of the voting shares of SIRIUS XM CANADA and 30% of the recapitalized business, and the U.S. SIRIUSXM will increase ownership from 37% to 70% of the economic interest and 33% of the votes. The CBC will be selling its shares in the transaction but will continue to produce several channels of programming for the service and the U.S. version. SIRIUSXM has announced that it and its SIRIUSXM RADIO INC. operating subsidiary have agreed with SIRIUS CANADA HOLDINGS INC. to recapitalize SIRIUSXM CANADA by taking it private.
The U.S. company is putting about US$275 million into the transaction; it had previously issued a demand for payment of an additional US$33.9 million as "activation fees" under its license agreement; the release announcing the new deal does not refer to that demand but notes that licensing and services agreements between the U.S. and Canadian companies "will be renewed and extended upon the consummation of the proposed transaction."
"We are confident this Recapitalization maximizes value for our shareholders by delivering a premium and certainty of value, or an option to remain invested in the market opportunity through SIRIUSXM, while also better positioning the Company to deliver enhanced and expanded services to our valued subscriber base," said SIRIUSXM CANADA Pres.CEO MARK REDMOND. "We are a proud Canadian player in the audio entertainment market, and we need to make changes to continue to successfully compete. Our operating environment is changing fast, creating long-term growth headwinds. We believe the Recapitalization is a necessary step in overcoming these challenges. Our commitment to supporting the industry and fostering the amazing talent we have in this country is unwavering. We will continue to ensure Canadians have access to the best content and that they will be able to access it in innovative new ways for an overall unmatched listening experience."
"This proposed transaction shows SIRIUSXM's and SIRIUSXM CANADA's commitment to serving the Canadian market with our leading bundle of premium content, much of which will continue to be created in CANADA. The existing CANADA-led governance structure will be preserved while vastly improving cooperation between the two companies on next generation products and services that will ensure a healthy future for satellite radio in CANADA," said SIRIUSXM U.S. CEO JIM MEYER. "While the CANADIAN BROADCASTING CORPORATION will cease to be a shareholder in SIRIUS XM CANADA following the transaction, it will continue to support the company as a programming provider."
"This transaction is the best opportunity for shareholders to maximize today's value by either tendering and taking cash, or continuing to participate in satellite radio by receiving shares in SIRIUSXM as it continues to grow in the ever expanding audio entertainment industry," said OBELYSK Chairman/CEO JOHN BITOVE.
"Since satellite radio launched in 2005, we have brought more exposure to Canadian talent in more markets than ever before," said SLAIGHT COMMUNICATIONS President/CEO GARY SLAIGHT. "It is in large part due to SIRIUSXM CANADA that the Canadian music scene thrives today. In the face of a rapidly evolving audio entertainment market, it is important to continually take steps to remain ahead of the competition. That is what this transaction enables. It is an opportunity to strengthen SIRIUSXM CANADA's overall market position, enhance the Company's long-term prospects and further expand the platform for CANADA's great talent into the USA and other parts of the world."