Worldspace in default, amends agreement with noteholders

By Devika Patel

Knoxville, Tenn., June 4 - Worldspace Satellite Radio said it entered into letter agreements with each of the four holders of its secured notes issued on June 1, 2007 and its amended and restated convertible notes also issued on June 1, 2007.

Under the terms of the new agreement, the noteholders have agreed to defer the company's obligation to pay $17.7 million in principal amount of the secured notes as well as the interest due on the secured notes and convertible notes.

The holders also agreed to forbear exercising their rights and remedies under the default.

The payments have been deferred until June 30.

The remaining unpaid principal of the secured notes, including all interest, will be paid in full by July 31.

The convertible notes now will have a conversion price of $2.00 per share, reduced from $4.25 per share.

In addition, all of the outstanding convertible notes will be repaid in full by Sept. 30 and the company will also pay a prepayment fee of 1.5% on the convertibles' outstanding principal and interest.

The convertible notes will now be secured by a first-priority security interest in the company's assets.

Worldspace also has agreed not to allow a lien against its assets for any other debt than the secured notes and the convertible notes while these notes are outstanding.

In addition, each of the noteholders will receive a pro rata portion of 5 million warrants, exercisable for class A common shares at $1.55 per share for five year s.

Worldspace is a satellite-based digital radio services company based in Silver Spring, Md.

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