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Sirius XM Radio Files Certificate Of Ownership And Merger —Completes Merger

|Includes: Sirius XM Holdings Inc. (SIRI)

By Dennis “Cos” Costa

Sirius XM Radio, Inc. (NASDAQ: SIRI) filed an SEC Form 8-K on January 12th, 2011, which contained all documents necessary to merge its wholly-owned subsidiary XM Satellite Radio Inc. (“XMSR”), with and into the parent company. The “Company”, Sirius XM Radio Inc., as the surviving corporation of the merger, in a material modification to rights of security holders, stated that the merger complies with all covenants and conditions precedent contained in  XMSR and the parent’s pertinent debt instruments. This includes all applicable leverage ratio tests.

In this 8-K filing, the Company included a Certificate of Ownership and Merger, five Supplemental Indenture to Indentures for all of XMSR outstanding debt, and a Collateral Agreement relating to the Sirius XM Radio’s 9.75% Senior Secured Notes due 2015. All of the details included in the documents can be found in the Form 8-K’s, Item 9.01 Financial Statements and Exhibits, and are dated January 12th, 2011.

Contained in the certificate of ownership and merger, were a list of facts relating to the merger and resolutions made by the Board of Directors (BOD), that were adopted on December 7th, 2010. In summary, these facts and resolutions basically outlined that:

  • All shares of XMSR are owned by the Company and would be canceled upon the merger completion.
  • That the BOD deemed the merger in the best interest of the Company and its shareholders
  • That all classes of the Company’s stock will remain unchanged and have full value to the holders of the stock prior to the merger, after the merger is complete
  • That the Merger is intended to qualify as a reorganization under Section 368(a) of the Internal Revenue Code of 1986.  That the Merger is hereby approved and adopted as a plan of reorganization for purposes of Sections 354 and 361 and any action necessary to effect such tax treatment be authorized and approved.

This filing represents the final phase and completion of a nearly 2-1/2 year process that the company has been undertaking since the FCC approved the merger of equals in August, 2008. The second phase to this merger and consolidating of the parts, was filed on another SEC Form 8-K, on April 16th, 2010, when XM Satellite Radio Holdings was merged into and with XM Satellite Radio Inc.

With this filing, the company has now completed the merger process. Investors and observers are now looking forward to getting a report on how the company performed in its fourth quarter of 2010, and getting guidance for its operating and financial expectations for 2011.

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Position: Long SIRI

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Disclosure: I am long SIRI.