Troubled satellite radio company Sirius XM announced Tuesday, following reports, that it will accept an investment from cable giant Liberty Media.
The investment, which will save Sirius XM from bankruptcy, will take the form of $530 million in loans in exchange for an equity stake on Liberty's behalf.
The first phase of the investment will consist of a $280 million loan, $250 million of which will be funded immediately on Tuesday, a release from Sirius XM explained. The second phase, a $150 million loan, will be aimed specifically at the company's XM Satellite Radio subsidiary. Liberty will also offer to purchase up to $100 million worth of XM's outstanding loans.
"We are pleased to have come to this agreement with Liberty Media, particularly in light of today's challenging credit markets," Sirius XM CEO Mel Karmazin, whom a group of creditors had been threatening to oust if the company chose bankruptcy over an investment deal, said in a statement. "Liberty's investment is an important validation of what Sirius XM has already achieved and a vote of confidence in what we will achieve. This agreement enables Sirius XM to continue to develop the opportunities first outlined in the merger of Sirius and XM."
Sirius XM was formed in July when longstanding merger agreements between two rival satellite radio companies, Sirius Satellite Radio and XM Satellite Radio, closed following FCC approval.
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