This is hugh! And Sirius! :)
from Tom Taylor’s radio-info.com column (free subscription via email):
XM is stretching – really stretching – to cover its obligations to Major League Baseball.
Call it “staring at an 0-2 pitch”, maybe. This is one of those outsize content deals that a merged XM+Sirius would be in a better position to field. But XM’s hustling because of an upcoming obligation to MLB. In 2005, it agreed to pay the league $60 million a year and also – here’s the catch – to keep $120 million stashed in an escrow account. At that time XM and Sirius were waging one of their periodic bidding wars (Sirius snatched NASCAR away from XM).
XM has been satisfying the MLB requirement with a surety bond for the $120 million. But that bond expires June 30 and XM tells the SEC it just created a new escrow account the hard way, with $57.5 million of its own precious cash and $62.5 million in borrowed money. But that act “could have an adverse effect on our financial position” if the amount’s not replaced with “a letter of credit, surety bond, or other similar arrangement.” But there’s more buried in the XM filing blandly labeled “other events.” XM’s still holding a $150 million line of credit provided by General Motors – but that can only be used to make payments back to GM. XM now says “we expect to begin utilizing the GM credit facility in June 2008.” So what does that mean? The company maintains it will meet the important “fully funded” standard as long as it hits its revenue, expense and cash flow projections. But what it’s really hoping for is help from the Portals – the FCC. Last Friday Chairman Martin indicated the agency “could act by the end of the second quarter” on the merger request. What’s the hangup? Conflicting conditions demanded by the various Commissioners.