Sirius XM Radio to continue share buybacks, maintain 3.5 times leverage

By Lisa Kerner

Charlotte, N.C., Oct. 1 - Sirius XM Radio Inc. chief financial officer David Frear said regarding the use of free cash flow, "unless we find something to buy, we might as well send it back to shareholders."

The company maintains about $1 billion of free cash flow a year.

Sirius is on pace to go through its $2 billion share repurchase it announced last December in the course "of the next few months," Frear said. He wouldn't be surprised if the company's board did another authorization during that time.

Frear made his comments during a question-and-answer session that covered everything from cars to subscribers to Howard Stern at the Deutsche Bank Leveraged Finance Conference in Scottsdale, Ariz., on Tuesday.

According to Frear, Sirius is firm about maintaining its leverage at about 3.5 times.

"We have said we don't intend to be an investment-grade company," said Frear, adding that it would make sense to move that leverage up at some point.

According to the CFO, the company's leverage is actually half a turn under from "what you see on the balance sheet."

Frear said it is a "great time" to be an issuer of debt.

"In the last 14 months, we've issued just under $2.7 billion of debt at rates between 4¼% and 5 7/8%."

Frear said the company's convertibles come due in a year and are "deeply in the money," making them "overwhelming likely to be equity."

Sirius XM is a New York-based satellite radio provider.

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