Inching Toward Merger, XM Offers Senior Notes

The great satellite radio merger inches ever closer.

This morning, XM Satellite Radio (XMSR) announced a $400 million offering of senior notes, which it said is “part of a series of transaction to refinance certain debt” in connection with its pending merger with Sirius Satellite Radio (SIRI). The company said the deal was structured in a way that would allow it to be unwound if the merger is not completed. The deal still await final approval from the FCC.

XM also announced that it added 322,000 net new subscribers in Q2, increasing the total to 9.653 million, up 17% from a year ago. Gross additions in the quarter were 1,081,000, including 857,000 OEM additions, and 224,000 from retail.

XM said churn in the quarter was 1.67%, down from 1.77% in Q1 and 1.84% a year ago. The company said subscription revenue in the quarter would be $283 million to $288 million, with adjusting operating loss of $32 million to $38 million. Conversion rates for promotional subscribers is expected to be 52.7% and 53.4%. The company expects to file a 10-Q with final results for the quarter in the next few days.

This morning, XMSR is up 24 cents, or 2.8%; SIRI is up 5 cents, or 2.2%, at $2.33.