SiriusXM Agrees To Back Its Canadian Unit's Preference To Go Private

SiriusXM SIRI revealed Friday that it and Sirius XM Radio Inc., its operating subsidiary, have struck a deal with Sirius Canada Holdings Inc. (Sirius XM Canada) to recapitalize Sirius XM Canada XSR. This will result in SiriusXM and some Canadian shareholders to form a new company to acquire shares of Sirius XM Canada, which were not already owned by them following a plan of arrangement.

As per the transaction deal, Sirius XM Canada shareholders would be allowed to elect to get C$4.50 in cash for every share of Sirius XM Canada held, Shares of its common stock or a combination thereof. The company indicated that not more than 35.0 million shares of SiriusXM's common stock would be issued in connection with the agreement.

The company's CEO, Jim Meyer, commented, "This proposed transaction shows SiriusXM's and Sirius XM Canada's commitment to serving the Canadian market with our leading bundle of premium content, much of which will continue to be created in Canada. The existing Canada-led governance structure will be preserved while vastly improving cooperation between the two companies on next generation products and services that will ensure a healthy future for satellite radio in Canada. While the Canadian Broadcasting Corporation will cease to be a shareholder in Sirius XM Canada following the transaction, it will continue to support the company as a programming provider."

As a result of the recent development, Sirius XM Canada would continue to function under its voting control. Currently, Obeylysk Media and Slaight Communications have together 67 percent of the voting shares of the Canadian unit and 30 percent of the economic stake in the recapitalized business. The company would boost its economic ownership to 70 percent from 37 percent and 33 percent of the voting shares.

SiriusXM said that it expects to add approximately US$275 million to facilitate the transaction. More over, the licensing and services agreements between SiriusXM and Sirius XM Canada would be renewed and extended after the consummation of the proposed transaction.

The company expects the recapitalization to close before the end of the fourth quarter of 2016.