Moody’s Places XM Ratings Under Review for Possible Downgrade
Approximately $450 million of Debt Securities Affected
New York, December 31, 2002 — Moody’s Investors Service placed XM Satellite Radio Holdings Inc’s (XM)
ratings under review for possible downgrade including:
(i) the Caa1 rating on its $325 million of 14% senior secured
discount notes due 2010,
(ii) the Caa3 rating on its $79 million of convertible subordinated
notes due 2006,
(iii) the Ca rating on its $43 million of 8.25% of
convertible redeemable preferred stock due 2012, and
(iv) the company’s Caa1 senior implied rating, and
(v) XM’s Caa2 senior unsecured Issuer rating.
The review for possible downgrade is prompted by the recently announced
plan to recapitalize the company. Moody’s is concerned that the
plan, which includes additional indebtedness at the senior secured
level, will further strain the company’s balance sheet and further
subordinate existing subordinated noteholders and preferred stockholders.
Moreover, XM’s liquidity position has been weak. Without
the closing of this or some other liquidity event, it is unlikely
that the company will be able to operate beyond the first quarter of 2003.
Moody’s review will focus on the uncertainty regarding the ability of
the company to support the proposed capital structure. In addition,
the review will consider the adequacy of the new financing relative to
the company’s expected need through the rating horizon and the likelihood
of additional financial support from XM’s strategic partners. However,
as a consequence of the high level of uncertainty regarding both the company
and the sector in which it operates, the severity of the possible
downgrade is unclear.
XM Satellite Radio, Inc. is a development stage company founded
to commercialize satellite-to-car audio services in the
US. It is headquartered in Washington, D.C.
New York
Russell Solomon
Senior Vice President
Corporate Finance Group
Moody’s Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Christina Padgett
VP – Senior Credit Officer
Corporate Finance Group
Moody’s Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
