Sirius sets long-awaited buyback, issues dividend

Thu Dec 6, 2012 11:34am EST
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By Liana B. Baker

(Reuters) - The board of Sirius XM Radio Inc approved a $2 billion common stock repurchase program and issued a special dividend, giving a big payout to its biggest shareholder, Liberty Media.

Liberty Media, which owns about 49.8 percent of Sirius' stock and is trying to gain control of the radio company, said it will participate in the company's share repurchases in a way that will not affect its ownership interest.

Sirius, the largest U.S. satellite radio provider with more than 23 million subscribers, declared a special cash dividend of 5 cents per share of common stock, payable on December 28 to shareholders as of December 18. The company expects to pay out about $325 million in total for the dividend.

Based on its stake, Liberty will be paid roughly $160 million from the special dividend, according to Macquarie analyst Amy Yong, who expects the buyback to be implemented in 2013.

Yong estimated Liberty spent about $1.6 billion in recent months to raise its Sirius XM stake from 40 percent.

The company had $556.27 million in cash and cash equivalents for the quarter ended September 30. It announced on Wednesday that it entered into a new $1.25 billion revolving credit facility, which should provide financial flexibility for the dividend payout, according to ISI analyst David Joyce.

The investment firm ISI expects Sirius to have "plenty of cushion" for its dividend, estimating the company will end the year with about $480 million in cash.

Sirius did not reveal the timing of the buyback, which had been expected by analysts and investors. It said the timing and amount of shares repurchased would be based on the "evaluation of market conditions."   Continued...