XM Satellite Radio will start off the new year with an improved balance sheet after it retired nearly $100 million in debt with new equity.
Satcaster on Thursday issued more than 2.7 million shares in exchange for $98.1 million in senior secured notes due in 2009.
An XM spokesman said the move would save the company about $66 million in interest payments.
At XM’s current share price, the equity is worth approximately $102 million, giving the debt holders a slight bonus.
While the move dilutes XM’s stock, which increased in value more than 40% in 2004, it helps the fast-growing company reduce costs and its recurring losses.
XM ended the year with more than 3.1 million subs, while competitor Sirius finished above 1 million. Both companies regularly lose more than $100 million per quarter, but hope accelerating subscription rates will help them grow revenue substantially in the next several years.
Shares in XM closed down 1% at $37.28 Thursday.
(Bloomberg News contributed to this report.)