Surety Bonding for XM Radio
Wednesday, May 28th, 2008I came across a interesting article on Surety Bonding for XM radio
Authored by Mark Hefflinger on May 27, 2008 - 8:33am.
Washington - XM Satellite Radio (NASD: XMSR), the satellite radio provider awaiting government approval to merge with rival Sirius, disclosed in a filing with the Securities and Exchange Commission (SEC) that it must come up with $120 million in financial commitments to avoid an “adverse effect” on its financial position.
The need stems from the company’s multi-year deal with Major League Baseball, which requires XM to maintain $120 million in escrow.
The amount previously was covered through a surety bond, set to expire next month, and was replaced on May 16 by a mixture of current operating cash and borrowings under the company’s credit facility.
XM, however, said that the current arrangement reduces its cash liquidity, and “could have an adverse if we are not able to replace the escrow arrangement with a letter of credit, surety bond or other similar arrangement.”
