TEXT-S&P: Sirius XM rating unchanged after stock repurchase
Dec 7 - Standard & Poor's Ratings Services said today that its corporate credit rating and outlook on Sirius XM Radio Inc. (BB/Stable/--) is not currently affected by the announcement that its board of directors has approved a $2 billion common stock repurchase program and a $325 million special dividend payable on Dec. 28, 2012. The timing and magnitude of share repurchases have not been determined by the company. We expect Sirius XM will fund the share repurchase program through cash, which was $556 million as of Sept. 30, 2012, discretionary cash flow, and borrowings under its revolving credit facility. We do not expect leverage will increase above our 4.5x target for the company at the current rating despite its adoption of a more aggressive financial policy, because of its moderate debt leverage, good operating outlook, and growing discretionary cash flow. The lease-adjusted gross debt-to-EBITDA ratio declined to 2.9x as of Sept. 30, 2012, from 4.5x a year ago, as a result of good operating performance, supported by 9% growth in subscribers and a 12% price increase for its basic monthly service in January 2012. Revenues increased 14% in the three months ended Sept. 30, 2012, while EBITDA rose 24%, as the majority of the company's costs are fixed, except automaker revenue share, music royalties, and subscriber acquisition costs.