It has been known that mandatory debt refinancing was coming down the pipe for both XM Satellite Radio Inc. (NASDAQ: XMSR) and for Sirius Satellite Radio inc. (NASDAQ: SIRI).  We have now seen the pricing of some $778.5 million of new senior notes offered under a Rule 144A and Regulation S under the SEC rules.  This appears to be an increased offering from the $400 million previously discussed.

These notes will bear interest at an annual rate of 13% and the priceto investors will be 89.93% of the principal amount of the notes.  Thisgives an effective yield to maturity of about 16%. 

The gross proceeds from the raise are noted as $700,105,050 from thenotes being sold before deducting the initial purchasers’ discounts,commissions, and offering expenses.

The new notes will be guaranteed by XM Satellite Radio Holdings Inc.and is part of a series of transactions to refinance certain debt of XMin connection with the pending merger with SIRIUS Satellite Radio Inc.

To top it off, the offering is structured so that is can be unwound ifthe merger is not consummated. Based on most recent data the merger is believed to be approved, but is still as of 11:35 AM officially in the pending category. 

Jon C. Ogg
July 24, 2008

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