SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): Commission File Number:
DECEMBER 5, 2001 0-27441
XM SATELLITE RADIO HOLDINGS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 54-1878819
(State or other jurisdiction (IRS Employer
of incorporation) Identification Number)
1500 ECKINGTON PLACE, N.E.
WASHINGTON, D.C. 20002-2194
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(202) 380-4000
Date of Report (Date of earliest event reported): Commission File Number:
DECEMBER 5, 2001 333-39178
XM SATELLITE RADIO INC.
(Exact name of registrant as specified in its charter)
DELAWARE 52-1805102
(State or other jurisdiction (IRS Employer
of incorporation) Identification Number)
1500 ECKINGTON PLACE, N.E.
WASHINGTON, D.C. 20002-2194
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(202) 380-4000
EXPLANATORY NOTE
This current report on Form 8-K is filed jointly by
XM Satellite Radio Holdings Inc. ("Holdings") and XM Satellite Radio Inc.
("XM"). XM is a wholly-owned subsidiary of Holdings.
ITEM 5. OTHER EVENTS.
On December 5, 2001, Holdings entered into a Customer Credit Agreement
with Boeing Capital Services Corporation for $35 million in new debt financing,
and XM amended its existing obligations with regard to $31 million that will
become due to its satellite manufacturer, Boeing Satellite Systems
International, Inc. under its Satellite Purchase Agreement with Boeing
Satellite.
ASSIGNMENT OF GROUND SPARE SATELLITE RIGHTS
In connection with the new loan, Holdings entered into an Assignment
and Novation Agreement by which XM transferred to Holdings all of XM's rights
and obligations under its Satellite Purchase Agreement with Boeing Satellite
with respect to the bus module of the ground spare satellite being constructed
by Boeing Satellite. XM retained all rights and obligations with respect to the
two satellites previously delivered in orbit and with respect to the portions of
the ground spare satellite other than the satellite bus. In connection with this
transfer, Holdings paid XM an aggregate purchase price of $31.6 million in cash.
CREDIT AGREEMENT WITH BOEING CAPITAL
Holdings secured $35 million in new debt financing from Boeing Capital
under the Credit Agreement, payable in a lump sum in five years. The loan is
secured by all of Holdings' interest in the ground spare satellite bus, the
provisions of the Satellite Purchase Agreement relating to the ground spare
satellite bus, proceeds of insurance covering the same and proceeds and products
thereof.
The outstanding amount of the loan bears interest at a rate per annum
equal to LIBOR plus 3.5% for the first two years of the loan and LIBOR plus 4.5%
for the remaining term. Accrued interest is payable in arrears at the end of
every three month period from the date of the loan. Any amount that becomes
overdue would bear interest at a rate per annum equal to the otherwise
applicable interest rate plus 2%. The loan becomes due prior to the end of the
five-year term if Holdings proposes to have its ground spare satellite shipped
to the launch processing facility.
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Holdings may prepay the loan or portions thereof in amounts of at least
$5 million, or any multiple of $1 million in excess thereof, together with
accrued interest and LIBOR breakage costs. Holdings must prepay the loan,
together with accrued interest and LIBOR breakage costs, if the provisions of
the Satellite Purchase Agreement with Boeing Satellite with respect to the bus
module of the ground spare satellite being constructed by Boeing are terminated.
The loan also must be repaid if Holdings or XM (without Boeing Capital's prior
written consent) enter into any merger transaction or transfer a substantial
part of its business or property. Prepaid amounts may not be reborrowed by
Holdings.
Holdings used $31.6 million of the proceeds of the loan for payments to
XM and may use the remainder only to pay amounts owed to Boeing Satellite under
the provisions of the Satellite Purchase Agreement with respect to the bus
module of the ground spare satellite.
Holdings is subject to various affirmative and negative covenants in
connection with the loan. Holdings must maintain (or cause Boeing Satellite to
maintain under the Satellite Purchase Agreement) insurance covering risk of loss
or damage to the ground spare satellite, and in certain cases the proceeds of
such insurance must be used to repay the loan. The Credit Agreement prohibits
Holdings from disposing of the ground spare satellite bus or other collateral
securing the loan or permitting any lien to exist on the same (except for
certain permitted liens). Holdings and XM may not, without Boeing Capital's
prior written consent, modify or waive the provisions of the Satellite Purchase
Agreement with respect to the bus module of the ground spare satellite and
may not assign its rights under the Assignment and Novation Agreement.
Events of default under the Credit Agreement include, but are not
limited to:
o failure to pay amounts due under the loan, subject to limited rights to
cure with regard to interest and fees;
o material inaccuracy of representations or warranties or non-performance
of covenants, subject to limited rights to cure such defects;
o an event of default under, or an event that allows for the acceleration
of maturity of, Holdings' material indebtedness, subject to certain
exceptions;
o defects in the validity or perfection of the liens securing the
collateral, subject to limited rights to cure such defects;
o failure to obtain, renew, maintain or comply with certain material
government approvals;
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o failure to renew or maintain any insurance coverage required under the
Credit Agreement; and
o default under the Satellite Purchase Agreement or termination thereof
by Boeing Satellite in accordance with the terms of such agreement.
Upon an event of default, Boeing Capital may accelerate the maturity of the
loan, including all accrued interest and other amounts due.
AMENDMENT TO THE SATELLITE PURCHASE AGREEMENT
Concurrently with the loan, XM amended the Satellite Purchase
Agreement with Boeing Satellite. Boeing Satellite has agreed to postpone the
due dates for approximately $31 million of payments due with respect to the
ground spare satellite and performance incentive payments with respect to the
two satellites currently in orbit. XM has agreed to waive its rights under
the Satellite Purchase Agreement to certain liquidated damages.
Attached as Exhibits 10.1, 10.2. 10.3 and 10.4 to this Current Report
on Form 8-K and incorporated herein by reference are the text of the Credit
Agreement and related security agreement, the Assignment and Novation Agreement
and the amendment to the Satellite Purchase Agreement. The foregoing summary
description does not purport to be complete and is qualified in its entirety by
reference to the exhibits identified in Item 7 below.
* * * *
On November 15, 2001, XM entered into a supplemental indenture with
The Bank of New York (successor trustee to United States Trust Company of New
York) to clarify certain language in the indenture related to its 14% Senior
Secured Notes due 2010.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
10.1 Customer Credit Agreement dated as of December 5, 2001
between Holdings and Boeing Capital Services Company.
10.2 Security Agreement dated as of December 5, 2001, between
Holdings and Boeing Capital Services Company.
10.3 Assignment and Novation Agreement dated as of December 5,
2001, between Holdings, XM Satellite Radio Inc. and Boeing
Satellite Systems International Inc.
10.4 Amendment to the Satellite Purchase Contract for In-Orbit
Delivery dated as of December 5, 2001 between XM Satellite
Radio, Inc. and Boeing Satellite Systems International Inc.
[CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF
THIS DOCUMENT.]
10.5 Third Amended and Restated Satellite Purchase Contract
for In-Orbit Delivery dated as of May 15, 2001 between
XM Satellite Radio, Inc. and Boeing Satellite Systems
International Inc. [CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED FOR PORTIONS OF THIS DOCUMENT.]
10.6 Supplemental Indenture, dated as of November 15, 2001, by
and between XM Satellite Radio Inc. and The Bank of New York
(successor to United States Trust Company of New York).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
each of the registrants has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
XM SATELLITE RADIO HOLDINGS INC.
Date: December 6, 2001 By: /s/ JOSEPH M. TITLEBAUM
-----------------------
Joseph M. Titlebaum
Senior Vice President,
General Counsel and
Secretary
XM SATELLITE RADIO INC.
Date: December 6, 2001 By: /s/ JOSEPH M. TITLEBAUM
-----------------------
Joseph M. Titlebaum
Senior Vice President,
General Counsel and
Secretary
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EXHIBIT INDEX
Exhibit Description
- ------- -----------
10.1 Customer Credit Agreement dated as of December 5, 2001 between
Holdings and Boeing Capital Services Company.
10.2 Security Agreement dated as of December 5, 2001, between Holdings
and Boeing Capital Services Company.
10.3 Assignment and Novation Agreement dated as of December 5, 2001,
between Holdings, XM Satellite Radio Inc. and Boeing Satellite
Systems International Inc.
10.4 Amendment to the Satellite Purchase Contract for In-Orbit
Delivery dated as of December 5, 2001 between XM Satellite
Radio, Inc. and Boeing Satellite Systems International Inc.
[CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS
DOCUMENT.]
10.5 Third Amended and Restated Satellite Purchase Contract
for In-Orbit Delivery dated as of May 15, 2001 between
XM Satellite Radio, Inc. and Boeing Satellite Systems
International Inc. [CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED FOR PORTIONS OF THIS DOCUMENT.]
10.6 Supplemental Indenture, dated as of November 15, 2001, by
and between XM Satellite Radio Inc. and The Bank of New York
(successor to United States Trust Company of New York).