Liberty Media linta will invest $530 million in financially struggling satellite radio company Sirius XM Radio siri, the companies said Tuesday.
The investment comes after Sirius warned it could file for bankruptcy as early as Tuesday if it could not successfully negotiate with its debt holders.
As part of the deal, Liberty will provide a $280 million senior secured loan to Sirius, $250 million of which will be funded Tuesday. Sirius will use the proceeds of the loan to repay $171.6 million of its maturing convertible notes due Tuesday. The rest will be used for general corporate purposes.
The loan bears a 15% interest rate and matures in December 2012.
The second phase of Liberty's investment provides another loan of $150 million to Sirius's subsidiary XM Satellite Radio. Liberty has also agreed to offer to buy from lenders up to $100 million of the loans outstanding under XM Satellite Radio's existing credit facilities.
In exchange, Liberty will get 12.5 million shares of preferred stock convertible into 40% of Sirius's common shares, and two seats on the company's board. Sirius says it expects Liberty Chairman John Malone and President and Chief Executive Greg Maffei to join its board.