Pic: http://greywolf.critter.net/gallery/mekagallery.htm
As we previously reported, satellite broadcaster SiriusXM was teetering on the brink of bankruptcy – Charlie Ergen had bought up $175 million of the company’s debt, which came due yesterday. Sirius CEO Mel Karmazin apparently burned through the Rolodex and found his white knight.
John Malone’s Liberty Media has agreed to invest $530 million, about half of which it contributed in cash today to retire the maturing notes. The balance will be contributed in the 3rd quarter, when another series comes due. It’s an expensive deal, though. Sirius is swapping 2-1/2% notes for 15% notes, preferred stock convertible into equity representing 40% of the company, and an equal proportion of representation on the board.
Malone and Ergen are long-time rivals (recall that Ergen owns EchoStar and Dish Network), so this harkens back to Sir Lawrence Wildman stealing Bluestar Airlines out from under Gordon Gekko. It also means that Karmazin likely gets to keep his job, as it was no secret Ergen wanted to fire him. Don’t feel too bad for Ergen, though, he bought the debt for pennies on the dollar and got paid out at par.
The lucky lawyers on the deal are Gary Sellers (Stanford AB ‘74, Columbia JD ‘78) of Simpson Thacher for SiriusXM and Buzz McGrath of Baker Botts for Liberty. AmLaw Daily identifies a few other members of the team.
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the question is what does it mean for Howard Stern's comp – didn't he go to subscription radio for a very large sum of money, some of which was in the form of equity?