A Sirius satellite radio unit is shown installed in a vehicle.Jason Reed/Reuters
Sirius XM Canada Holdings Inc. has completed an oversubscribed debt offering worth $200-million that could lead to a special dividend for shareholders.
The Toronto-based communications company said favourable market conditions were behind the decision to refinance its senior notes back when it reported earnings on April 14. It planned to redeem $130.7-million of debt that paid a 9.75-per-cent coupon, and take on another $150-million at a lower interest rate.
But strong demand for the seven-year offering, which paid a 5.63-per-cent coupon, meant the sale led by TD Securities and National Bank Financial was oversubscribed.
The company also had $48-million in cash at the end of its last quarter, which combined with the roughly $70-million in extra money raised gives the company the financial flexibility to return capital to shareholders. This was one of the uses of the proceeds the company highlighted in its offering, along with funding acquisitions, reinvesting in the business or capex.
Sirius executives were asked on a recent conference call whether the company would consider issuing more debt with the possibility of returning some of that capital to shareholders, and chief financial officer Michael Washinushi said if the market demand was there, the company would consider increasing the load.
It's no surprise that investors were keen in this offering, since high-yield bond issuance has been slim so far this year.
The company's two largest shareholders are Sirius XM Radio Inc. with a 52-per-cent stake, and the Canadian Broadcasting Corp., which owns 21.7 per cent.