Troubled Sirius XM Radio announced Tuesday, following reports, that it will accept an investment from cable giant Liberty Media.
The investment, which will save the satellite radio company from bankruptcy or a hostile takeover, will take the form of $530 million in loans in exchange for an equity stake.
The first phase of the investment will consist of a $280 million loan, $250 million of which will be funded immediately on Tuesday, a statement from Sirius XM noted. The second phase, a $150 million loan, will be aimed specifically at the company's XM Satellite Radio subsidiary. Liberty, which owns a big stake in satellite television provider DirecTV, will also offer to purchase up to $100 million worth of XM's outstanding loans.
"We are pleased to have come to this agreement with Liberty Media, particularly in light of today's challenging credit markets," said Sirius XM CEO Mel Karmazin, whom creditors had been threatening to oust if the company chose bankruptcy over an investment deal. "Liberty's investment is an important validation of what Sirius XM has already achieved and a vote of confidence in what we will achieve. This agreement enables Sirius XM to continue to develop the opportunities first outlined in the merger of Sirius and XM."
Sirius XM was formed in July when longstanding merger agreements between two rival satellite radio companies, Sirius Satellite Radio and XM Satellite Radio, closed following FCC approval.
In October, Karmazin took the stage at a New York business-media conference and insisted that the company was on a firm path to profitability despite the fact that the credit crunch--then in its first throes--had hit Sirius XM particularly hard.
This post was expanded at 6:20 a.m. PST.