Satellite radio company, Sirius XM Holdings Inc. (NASDAQ:SIRI), is raising debt and the deal looks amazing from the perspective of strong demand and favorable interest rates. The company has debt to repay but the money could also find its way into the pockets of shareholders. According to analysts at Maxim Group, it seems likely Sirius XM would give shareholders a priority in distributing its newfound cash.
Sirius XM Holdings Inc. (NASDAQ:SIRI) initially announced offering of $750 million of Senior Notes that mature in 2025. However, soon after, the company bulked up the offering to $1 billion, citing heavy demand.
The debt environment is favorable to Sirius XM Holdings Inc. (NASDAQ:SIRI). The company is able to raise debt at lower rates and the investor appetite for debt is also high. Even companies with huge cash stockpile are raising debt because it is cheaper than repatriating overseas profits. Apple Inc. (NASDAQ:AAPL) is one of the prominent names raising debt despite having nearly $180 billion of cash in offshore accounts.
$2.5 billion bump to 2015 buyback plan
As concerns Sirius XM Holdings Inc. (NASDAQ:SIRI), the company has debt that runs into several billions of dollars that it needs to address. However, analysts at Maxim believe that the satellite radio company may want to make shareholders happy. The analysts predict that SIRI could increase its buyback program by $2.5 billion this year. Additionally, the company could add another $2.8 billion to the repurchase plan in 2016. SIRI has $3.5 billion remaining in its existing buyback program.
Shares of Sirius XM Holdings Inc. (NASDAQ:SIRI) have risen more than 10% so far this year.
Maxim has a $5 target price on the stock of SIRI and maintains a “Buy” rating on the satellite radio provider.
The rating firm predicts Sirius XM Holdings Inc. (NASDAQ:SIRI)’s 2016 revenue to rise 6.5% to $4.88 billion. They estimate $4.58 billion of revenue for the company in 2015. Ebitda this year is expected to come in at $1.67 billion and grow 12.2% in 2016 to $1.87 billion.
Sirius XM Holdings Inc. (NASDAQ:SIRI) continues to attract subscribers, finishing 2014 with 27.3 million accounts and expects to wind up 2015 with 28.5 million subscribers.