XM Satellite Radio ups interest rate on convertibles to 10% from 1.75%

By Jennifer Chiou

New York, July 25 - XM Satellite Radio Holdings Inc. announced that it executed the previously disclosed amendment to the indenture for its $400 million of 1.75% convertible senior notes due 2009, thus lifting to interest rate to 10%.

The noteholders that were part of the agreement have undertaken not to assert any claim that the proposed merger of XM with a subsidiary of Sirius Satellite Radio constitutes a fundamental change under the existing indenture.

In light of the amendment, holders of the convertible notes are no longer required to obtain joinders upon transfer of their notes, XM said.

On June 27, the company announced that it reached an agreement with holders of 94.6% of the notes to begin an exchange offer for the notes.

The company had said that it would begin the exchange offer before July 10 and would issue new 10% senior convertible notes due 2009 for the existing notes.

Outside of the coupon, the new notes have substantially the same terms as the existing notes.

The 10% interest rate on the new notes began to accrue retroactively on July 2.

The exchange offer is conditioned on the closing of the merger.

XM is a satellite radio services company located in Washington, D.C.

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