There were rumors of a possible sale-leaseback deal, and they appear to be true. XM Satellite Radio has entered into a sale-leaseback deal with Satellite Leasing LLC, bringing a total of $288.5 million in cash to XM.
The deal, which involves the selling of the XM-4 transponder (not the satellite itself) and subsequently leased back from Satellite Leasing, was finalized yesterday (February 13th) after months of negotiation and prep work. It follows some extensive in-orbit testing of XM-4 in January, and some additional insurance that was placed last week to get the deal to go through.
The sale-leaseback deal allows XM to add some quick liquidity on something that previously was not liquid, as well as to reap the tax benefits of owning the XM-4 satellite itself. XM has already paid off $44 million for outstanding mortgages on their property. The lease term is for 9 years, and XM will retain full operational control over XM-4 during the term.
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