▪ Offers growth and opportunity
▪ Provides consumers with accelerated
technological innovation and enhanced content with "Best Of"
▪ Enables satellite radio to better compete in
rapidly evolving audio entertainment industry
Nov. 24 /PRNewswire-FirstCall/ -
Canadian Satellite Radio Holdings Inc. (CSR), parent company of XM
Canada (XM Canada) (TSX: XSR) and Sirius
Canada Inc. (SIRIUS Canada) today announced they have
entered into a definitive agreement to combine the companies in an
all-stock merger of equals with a combined enterprise value of
approximately $520 million, which
includes long-term debt of approximately $130 million.
Under the terms of the agreement, Sirius
Canada shareholders will be issued treasury shares of CSR
representing a 58.0 per cent equity interest in CSR immediately
following closing of the transaction. The approximate ownership
interest in CSR following closing of the combination transaction
will be as follows: CSRI Inc., an entity controlled by John Bitove, the chairman of CSR, 30.0 per cent
voting interest (22.7 per cent equity interest); CBC/Radio-Canada
20.2 per cent voting interest (15.0 per cent equity interest);
Slaight Communications 20.2 per cent voting interest (15.0 per cent
equity interest); Sirius XM Radio Inc. (Sirius XM) (NASDAQ:SIRI)
25.0 per cent voting interest (37.1 per cent equity interest); with
the remainder being widely held.
Subject to shareholder approval, following consummation of the
combination transaction, CSR's board of directors will consist of
nine directors, including two directors nominated by each of CSRI
Inc. and Sirius XM, one director nominated by each of
CBC/Radio-Canada and Slaight Communications and three independent
members. John Bitove will be
Chairman of CSR. Subject to CRTC approval of the transaction
Mark Redmond, the current President
and CEO of Sirius Canada, will be
President and CEO and Michael Washinushi, the current CFO of XM
Canada, will be CFO. Michael
Moskowitz will remain as CEO of XM Canada and Jason Redman will remain as CFO of Sirius Canada through the approval process and
"This creates long-term shareholder
value for CSR," stated John Bitove.
"As a combined entity, XM Canada and Sirius
Canada will deliver exceptional value to subscribers, and
enhance the long-term success of satellite radio in Canada."
"The benefits of a merger are clear and together
we'll be better able to create more growth and opportunity for
shareholders, accelerate technological innovation and ensure that
satellite radio is able to compete in the rapidly evolving audio
entertainment industry," said Mark
Redmond. "This combination is the next logical step in the
evolution of satellite radio in Canada."
"The synergies and our intention to exchange the outstanding
senior notes will create a significantly stronger balance sheet for
the company, enabling us to further pursue high-return growth
opportunities," said Michael Washinushi.
Together, Sirius Canada and XM
Canada will create a stronger platform for future innovation within
the audio entertainment industry through key content and
programming relationships and distribution agreements with every
major automaker and retailers nationwide. Subscribers will continue
to be offered a broad range of commercial-free music, plus
exclusive sports coverage, news, talk and entertainment programming
and a best-of-both channel package over time.
The combination will create a leading Canadian media company and
nationwide audio entertainment provider that will benefit from a
highly experienced management team with extensive industry
knowledge in media and broadcast operations, consumer electronics,
customer care and subscriber management, automotive engineering and
The combined company will have a total subscriber base
of over 1.7 million. On a trailing 12-month
basis, the combined company will have pro forma revenues in
excess of $200 million, pro forma
EBITDA of approximately $7
million, and long-term debt of approximately $130 million. The combination is expected to
yield synergies of approximately $20
million within 18 months by allowing the combined company to
better manage costs through improved efficiencies and greater
economies of scale.
"This newly formed entity is good for Canadians and will create
an opportunity for CBC/Radio-Canada to distribute its world-class
content to a broader audience throughout North America," said Michel Tremblay, Senior Vice-President,
Corporate Strategy and Business Partnerships, CBC/Radio-Canada.
"Our involvement with satellite radio has allowed Canadian
artists to get exposure throughout North
America and we are very excited about the opportunities that
this merger creates for the future of audio entertainment in
Canada," said Gary Slaight,
President & CEO of Slaight Communications.
The companies will continue to operate independently until the
transaction is completed. The transaction is subject to approval by
CSR's shareholders (other than Sirius XM and its affiliates) at a
special meeting anticipated to be held in February 2011, a refinancing of CSR's current
indebtedness, regulatory review and approvals, including Canadian
Radio-television and Telecommunications Commission approval, as
well as the satisfaction of certain customary conditions for a
transaction of this nature. Further details of the transaction will
be included in a proxy circular to be mailed to shareholders in due
course. The definitive purchase agreement will be available on
SEDAR at www.sedar.com.
CSRI Inc., which currently holds a 77.0 per cent voting interest
in CSR, has entered into a voting support agreement with
Sirius Canada and its shareholders
pursuant to which it has committed to vote its securities in favour
of this transaction, subject to certain terms and conditions.
CSR's board of directors, based on the unanimous recommendation
of a committee of independent directors, has recommended that
security holders vote in favour of the transaction. National Bank
Financial Inc. acted as financial advisor to CSR and the CSR Board
of Directors. Canaccord Genuity Corp. acted as financial advisor to
the CSR board of directors and the CSR committee of independent
directors and has rendered an opinion, subject to the assumptions
and limitations described therein, that the consideration to be
paid pursuant to the transaction is fair, from a financial point of
view, to CSR.
Sirius Canada's board of
directors has unanimously approved the definitive agreement.
TD Securities acted as the exclusive financial advisor to
CBC/Radio-Canada and provided financial advice to Sirius Canada shareholders.
In addition, as part of today's announcement CSR
also announced its intention to exchange its outstanding unsecured
senior notes of US$69.8 million for
new unsecured senior notes of CSR with different terms. Holders
representing a majority of the outstanding unsecured notes have
agreed to negotiate in good faith the exchange offer circular and
consent solicitation statement. Following the settlement of such
documents, such holders have agreed to tender their notes in the
exchange offer for the new unsecured senior notes of CSR and
consent to proposed amendments to the indenture governing the
outstanding unsecured senior notes. Concurrent with the closing of
the exchange offer, CSR anticipates issuing additional new
unsecured senior notes on a private placement basis to accredited
investors - for a total of C$130
million of long term debt in the combined entity. It
is expected that the exchange offer and issuance of new unsecured
senior notes will be completed contemporaneously with the closing
of the combination transaction.
Conference Call Information
The companies will hold a joint conference call 2:00pm ET to discuss this announcement. The
conference call can be monitored by dialing 888-231-8191 within
Canada or 647-427-7450 internationally, access code 27254740.
About Canadian Satellite Radio Holdings Inc.
To find out more about Canadian Satellite Radio Holdings Inc. (TSX:
XSR), visit www.xmradio.ca.
About SIRIUS Canada
To find out more about SIRIUS visit www.sirius.ca.
Forward Looking Statements
Certain statements included above may be forward-looking in
nature. Such statements can be identified by the use of
forward-looking terminology such as "expects," "may," "will,"
"should," "intend," "plan," or "anticipates" or the negative
thereof or comparable terminology, or by discussions of strategy.
Forward-looking statements include estimates, plans, expectations,
opinions, forecasts, projections, targets, guidance or other
statements that are not statements of fact. Although CSR believes
that the expectations reflected in such forward-looking statements
are reasonable, it can give no assurance that such expectations
will prove to have been correct. CSR's forward-looking statements
are expressly qualified in their entirety by this cautionary
statement. Forward-looking information is provided as of the date
of this news release only, it should not be relied upon as of any
other date, and CSR assumes no obligation to update or revise this
information to reflect new events or circumstances, except as
expressly required by law. There can be no assurance that the
securities purchase agreement will receive all necessary approvals
or that the proposed transaction will be completed. Additional
information, including a thorough discussion of the risk factors
that can cause anticipated outcomes to differ from actual outcomes,
will be contained in CSR's filings with the Canadian securities
regulators, available at www.sedar.com.
This press release does not constitute an offer to purchase or
sell any securities or a solicitation of consents. Any offer to
purchase or sell securities or solicitation of consents will be
made by means of an offer to purchase or sell and consent
solicitation statement and related letter of transmittal. No offer,
solicitation, purchase or sale will be made in any jurisdiction in
which such an offer, solicitation, purchase or sale would be
SOURCE XM Canada
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