Filed by Sirius Satellite Radio Inc.
Pursuant to Rule 425 under the
Securities Act of 1933, as amended
Subject Company: Sirius Satellite Radio Inc.
Commission File No. 000-24710
SIRIUS REACHES AGREEMENT ON $1.2 BILLION RECAPITALIZATION
o Transaction to Provide $200 Million New Capital
o Targets Elimination of $700 Million Debt
o All $525 Million Preferred Stock to be Converted Into Common Stock
NEW YORK - October 17, 2002 - Sirius Satellite Radio (NASDAQ: SIRI), the premier
satellite radio provider, announced today an agreement with holders of more than
$1 billion of its debt and preferred stock, to convert substantially all of its
approximately $700 million of debt and all of its $525 million of preferred
stock into common stock, and raise $200 million from the sale of newly-issued
common stock.
The recapitalization will dramatically reduce the company's additional funding
needs. The additional $200 million, combined with the approximately $240 million
cash currently on-hand, is expected to give Sirius sufficient cash to operate
into the second quarter of 2004, based upon its current business plan.
Furthermore, the company continues to evaluate initiatives that could enable it
to achieve cash flow breakeven without raising additional funds.
"When completed, this transaction will give Sirius the strongest balance sheet
in our industry and, more importantly, allow us to focus 100% of our energies on
our business partners and acquiring subscribers for our premier entertainment
service," said Joseph P. Clayton, President and Chief Executive Officer of
Sirius Satellite Radio.
The new cash infusion will be provided by Oppenheimer global funds ($150
million) and affiliates of Apollo Management, L.P. ($25 million) and
The Blackstone Group L.P. ($25 million). Upon completion of the transaction,
affiliates of Apollo Management, L.P. and The Blackstone Group L.P. will
exchange all of their existing convertible preferred stock for shares of
common stock and warrants to purchase common stock.
When the transaction is completed, and assuming all debt and preferred stock is
converted into equity, Sirius' debt will be exchanged for 62% of the common
stock, the existing preferred stock will be exchanged for 8% of the common
stock, the providers of new funds will own 22% of the common stock, and the
existing common stock will retain 8% of the recapitalized equity. Existing
preferred stockholders will also receive warrants to purchase 9.1% of the common
stock at an average strike price of just under $1.
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Consummation of the recapitalization is subject to a number of significant
conditions, including completion of the debt exchange offer, approval of
existing stockholders, regulatory approval and other customary conditions.
Sirius expects to file an exchange offer and a proxy statement relating to the
transaction with the Securities and Exchange Commission in the next few weeks.
UBS Warburg is advising the company on the transaction.
Sirius will host a conference call on Thursday, October 17th at 4:00 p.m. (EST)
for investors and analysts. Hosting the call will be Joseph P. Clayton,
President and CEO, and John Scelfo, Executive Vice President and CFO. The
dial-in number for the call is 1-888-271-9723 (International 706-679-3027). The
link to the web cast will be available on the Sirius homepage, www.sirius.com,
an hour before the call. The conference call will also be replayed on October
17th beginning at 8:00 p.m. through October 24th. The domestic replay number is
1-800-642-1687 (International 706-645-9291). The replay pass-code is 6106752.
About Sirius
From its three satellites orbiting directly over the U.S., Sirius broadcasts 100
channels of digital quality radio throughout the continental United States for a
monthly subscription fee of $12.95. Sirius delivers 60 original channels of
completely commercial-free music in virtually every genre, and 40 world-class
sports, news and entertainment channels. DaimlerChrysler has announced plans to
offer Sirius radios in 16 models of Chrysler, Dodge and Jeep'r' vehicles
beginning this fall. Ford is planning to offer Sirius in select vehicle lines
sold in the United States, including Ford, Lincoln, Mercury, Mazda, Land Rover,
Jaguar, Volvo and Aston Martin. BMW has announced plans to offer Sirius radios
as an accessory in its most popular models through BMW centers across the
country, including select BMW 3 Series, 5 Series, X5 vehicles, and in MINI
vehicles through MINI dealerships. Nissan is currently offering Sirius radios in
the 2003 Nissan Pathfinder SUV and has announced plans to offer Sirius radios as
an option this fall on numerous Infiniti and Nissan 2003 models. Future Audi and
Volkswagen models will also offer Sirius. Kenwood, Panasonic, Clarion, Audiovox,
and Jensen satellite receivers, including models that can adapt any car stereo
to receive Sirius, are available at retailers such as Circuit City, Best Buy,
Sears, Good Guys, Tweeter, Ultimate Electronics and Crutchfield.
Click on www.sirius.com to listen to Sirius live, or to find a Sirius retailer
in your area.
Any statements that express, or involve discussions as to, expectations,
beliefs, plans, objectives, assumptions, future events or performance with
respect to Sirius Satellite Radio Inc. are not historical facts and may be
forward-looking and, accordingly, such statements involve estimates, assumptions
and uncertainties which could cause actual results to differ materially from
those expressed in any forward-looking statements. Accordingly, any such
statements are qualified in their entirety by reference to the factors discussed
in our Annual Report on Form 10-K for the year ended December 31, 2001. Among
the key factors that have a direct bearing on our results of operations are: our
need for substantial additional financing by early 2003; our dependence upon
third parties to manufacture, distribute, market and sell Sirius radios and
components for those radios; the unproven market for our service; our
competitive position and any events which affect the useful life of our
satellites.
The foregoing reference to the registered public exchange offer shall not
constitute an offer to sell or the solicitation of an offer to buy, nor shall
there be any sale of shares of common stock of Sirius in any state in which
such offer, solicitation or sale would be unlawful prior to registration
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or qualification under the securities laws of any such state. Investors and
security holders are urged to read the prospectus and the Registration Statement
on Form S-4 relating to the exchange offer for our debt (and any amendments
thereto) when they become available because they will contain important
information.
These documents and amendments to these documents will be filed with the
Securities and Exchange Commission. When these and other documents are
filed with the SEC, they may be obtained free at the SEC's web site at
www.sec.gov. You may also obtain for free each of these documents (when
available) from Sirius by directing your request to Patrick Donnelly, Executive
Vice President, General Counsel and Secretary at (212) 584-5100.
STATEMENT OF DIFFERENCES
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The registered trademark symbol shall be expressed as ..................... 'r'