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February 17, 2009 3:39 PM

Simpson Thacher Helps Sirius XM Stave Off Chapter 11

Posted by Brian Baxter

UPDATE: This story has been updated with attorney information for Baker Botts.

On the cusp of defaulting on $172 million in expiring debt, Sirius XM Radio managed to secure a $530 million investment from Liberty Media that, for the time being, will allow the embattled satellite radio company to stave off a bankruptcy filing.

Sirius turned to longtime outside counsel Simpson Thacher & Bartlett for help in securing an immediate $250 million investment by suburban Denver-based Liberty, which agreed to invest an aggregate of $530 million into New York-based Sirius XM.

Simpson Thacher capital markets and M&A partner Gary Sellers and corporate associate Peter Martelli led a team from the firm advising Sirius on the deal. Sellers previously advised Sirius on its $13 billion stock-for-stock merger of equals with XM Satellite Radio in February 2007. (Sellers was not immediately available for comment.)

The firm said in a statement that the agreement reached with Liberty gives the media holding company "a significant equity stake in Sirius XM," while allowing Sirius XM to "complete a comprehensive refinancing of its 2009 debt maturities."

Liberty received legal advice from its longtime outside counsel at Baker Botts. Corporate partners Marc Leaf and Frederick "Buzz" McGrath, finance partners Martin Toulouse and William Giusti, bankruptcy partner Judith Ross, bankruptcy special counsel Marty Green, tax special counsel R. Scott Langley, and associates Joel Hugenberger, Kerry Fox, Ian Roberts, Artoush Varshosaz, Shalla Prichard, Preston Bernhisel, and Matt Floyd comprised a sleep deprived 15-lawyer outside counsel team from the firm.

The Am Law Daily reported last week that New York-based Baker Botts partner Buzz McGrath was thought to be advising Liberty on a deal. McGrath previously represented Liberty on its acquisition of controlling interests in DIRECTV and QVC.

Liberty general counsel Charles Tanabe and deputy general counsel Craig Troyer provided in-house advice.

The last-minute deal allows Sirius XM to avoid a potential acquisition by Englewood, Colo.-based EchoStar--the DISH Network spinoff that had bought up large portions of the satellite radio company's debt in the hope that it could take control in the event that Sirius XM defaulted.

A call to White & Case M&A partner Daniel Dufner, Jr., longtime outside counsel to EchoStar, was not immediately returned on Tuesday afternoon.

Edward Weisfelner, chair of the bankruptcy and finance department at Brown Rudnick in New York, is representing a group of Sirius XM's creditors that vowed to push for the dismissal of CEO Mel Karmazin if the satellite radio company pursued a bankruptcy filing instead of the deal with Liberty.

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