SiriusXM Canada Provides Q&A Regarding Proposed Recapitalization Go-Private Transaction

TORONTO, Aug. 23, 2016 /CNW/ - Sirius XM Canada Holdings Inc. ("SiriusXM Canada" or the "Company") (TSX: XSR), the parent of Sirius XM Canada Inc., has provided the following questions and answers in response to queries and to address recent statements and information released by third parties and media regarding the previously announced proposed recapitalization go-private transaction (the "Arrangement"). The Special Committee and all non-interested members of the board of directors of the Company unanimously recommend that Company shareholders vote FOR the Arrangement for the reasons set out in the Company's management information circular ("Circular") that was filed on August 2, 2016. Capitalized terms used, but not defined, in this press release have the meaning ascribed thereto in the Circular.

Q.         What premium does the consideration offered for the Class A Shares represent?

The cash consideration represents a premium of 22.3% to the unaffected trading price of the Class A Shares on the TSX, and electing to receive SIRI share based consideration provides a potentially greater premium based on SIRI's current share price and exchange rates.

  • The cash consideration to be paid to holders of Class A Shares under the Arrangement represents a premium of 22.3% over the closing price of C$3.68 for the Class A Shares on the TSX on February 11, 2016, the day prior to the Company's announcement that it had been approached regarding a potential corporate transaction, and a premium of 17.7% over the 20-day volume-weighted average trading price of the Class A Shares on the TSX for the period ending February 11, 2016.
  • As recently announced by the Company, with Slaight Communications Inc. ("Slaight") and the Canadian Broadcasting Corporation ("CBC") electing to receive solely cash consideration, the total consideration that may be paid, at the election of shareholders, in the form of shares of Sirius XM Holdings Inc. ("SIRI") whether directly or indirectly through shares exchangeable for SIRI shares has increased to approximately 74% from approximately 50%. Based on the August 22, 2016, closing price of US$4.17 per SIRI share on the NASDAQ, the Bank of Canada noon exchange rate of C$1.2942 per US$1.00 and the fixed exchange ratio of 0.898 SIRI shares under the Arrangement, if all shareholders were to elect to receive the maximum SIRI consideration, the offer value, as of end of day August 22, 2016 was approximately C$4.76 per Class A Share (based on proration at a rate of 74%), being a premium of 29.3% over the closing price on February 11, 2016. The trading price per SIRI share and the US dollar exchange rate are subject to change.

Q.         Is the consideration fair, from a financial point of view?

Yes. In connection with the Arrangement, the Special Committee commissioned and received a fairness opinion and formal valuation from Ernst & Young LLP as well as a fairness opinion from its financial advisor, National Bank Financial Inc.  Each fairness opinion concludes that the consideration to be received by the minority shareholders pursuant to the Arrangement is fair, from a financial point of view, to such holders.

  • The formal valuation from Ernst & Young LLP, independent financial advisor to the Special Committee, provides that, based upon and subject to the analyses, assumptions, qualifications and limitations discussed therein, Ernst & Young LLP was of the opinion that, as of May 6, 2016, the fair market value of the Class A Shares was in the range of C$3.96 to C$4.83 per Class A Share.

Q.         How did the Special Committee arrive at its determination and recommendations?

In making its determinations and recommendations, the Special Committee considered and relied upon a number of substantive factors, carefully considered all aspects of the Arrangement Agreement and the Arrangement, and considered a variety of uncertainties, risks and other potentially adverse consequences concerning the Arrangement and the Arrangement Agreement including consideration thereof relative to the alternative of maintaining the existing ownership structure.

  • Having undertaken a thorough review of, and carefully considered, information concerning the Company, its various stakeholders, SIRI and the Arrangement, and after consulting with financial and legal advisors, the Special Committee has unanimously determined that (i) the consideration to be received by the minority shareholders pursuant to the Arrangement is fair from a financial point of view, and (ii) the Arrangement is in the best interests of the Company, and unanimously recommended that the Board approve the Arrangement and recommend that the minority shareholders vote in favour of the Arrangement.

Q.         Why have two proxy advisory firms made conflicting recommendations on supporting the Arrangement?

Glass Lewis & Co. ("Glass Lewis"), a leading independent proxy advisory firm, has recommended that shareholders vote FOR the Arrangement while Institutional Shareholder Services Inc. ("ISS") made a contrary recommendation. While Glass Lewis and ISS are entitled to make differing recommendations, the Company believes that Glass Lewis' analysis and conclusions better reflect the facts and circumstances of the proposed transaction and strongly disagrees with the analysis and recommendation put forward by ISS.

  • When providing the recommendation that shareholders vote FOR the Arrangement, Glass Lewis stated that the Arrangement: "represents the most logical and attractive option for minority shareholders." Additionally, Glass Lewis advised that: "the transaction is likely to lead to greater clarity, enhanced performance and superior value for shareholders…we believe the proposed transaction is in the best interests of shareholders."
  • The Company believes that ISS' analysis does not recognize the significant value the transaction creates for minority shareholders and fails to adequately consider certain key facts and risks that could have a long-term impact on the Company in the event that the Arrangement is not completed.

Q.         If the Arrangement is not completed, what is the likelihood that the royalty rates paid by the Company to SIRI will increase materially?

If the Arrangement is not completed there is a significant likelihood that the royalty rates paid by the Company to SIRI under the XM and Sirius license agreements could increase materially upon expiry and extension of such agreements, which would reasonably be expected to negatively impact the Company's financial position and consequently have an adverse effect on the market price of the Company's Class A Shares.

  • While there is no way to know what the outcome of future license agreement negotiations with SIRI would be, the Special Committee carefully considered this risk as part of its evaluation of the Arrangement.
  • The Special Committee determined that there was a significant likelihood that the royalty rates paid by the Company to SIRI under the XM and Sirius license agreements could increase materially upon expiry and extension of such agreements. If such royalty rates were to increase materially, they would reasonably be expected to impact the Company's financial condition, results of operations and prospects, including its ability to pay dividends.
  • In evaluating the risk of a potential increase in the royalty rates, the Special Committee considered, among other things, the terms of the license agreements and the ability to arbitrate thereunder, the Company's general dependence on SIRI, the market for satellite radio in Canada, the Company's relative negotiating leverage vis-à-vis SIRI, public statements by representatives of SIRI regarding their position on elevated royalty rates, negotiation of access to and the royalty rates in respect of new services that are not available under the current XM and Sirius licence agreements, and the analysis done by Ernst & Young LLP and National Bank Financial Inc. as part of the fairness opinions and formal valuation they prepared.

Q.         If the Arrangement is not completed, what is the impact of the Company's dispute with SIRI relating to activation fees?

If the Arrangement is not completed, the Company expects that the current standstill agreement will be terminated by SIRI and the dispute will need to be resolved between the parties or through arbitration.

  • While there is no way to know what impact the activation fee dispute will have on the Company, its operations and its contractual relationship with SIRI, the Company is confident in its interpretation of the XM licence agreement and the calculation of the "activation fees" thereunder, and would seek resolution through binding arbitration under the terms of the XM licence agreement. However, there can be no assurances regarding the resolution of the activation fee dispute, whether as a result of negotiation or arbitration, including as to the terms and timing of any such resolution, or the impact of the dispute on the Company's relationship with SIRI or subsequent license agreement negotiations.

Q.         If the Arrangement is not completed, what will be the Company's dividend policy?

The Board would establish the Company's dividend policy based on all relevant facts at such time consistent with the Company's approach to dividend determination and corporate governance.

  • The Company's existing dividend policy establishes that the amount and timing of any dividend is within the discretion of the Board, and will depend on the Company's financial condition, compliance with the terms and conditions of the Company's credit and contractual arrangements on an ongoing basis, general business conditions and risks, and other factors that the Board considers to be relevant at the time.

Q.         If the Arrangement is not completed, what alternatives are available to the Company?

It is expected that the Company would continue to operate on a stand-alone basis and would need to address the risks and challenges currently facing the Company including in respect of the activation fee dispute and the renewal of the XM and Sirius licence agreements.

  • Given the Company's ownership and agreements with SIRI, there is a low likelihood that an alternative transaction would be available to the Company or that the Company will be able to find a party willing to pay an equivalent or more attractive price than the price to be provided pursuant to the Arrangement.

Q.         Were alternative offers or an auction sales-process considered?

Yes, but unlike some M&A situations, the Special Committee and the Company believed that there was a low likelihood of alternative transactions for the Company and its shareholders.

  • The Special Committee considered the prospect for alternative offers and determined that there was a low likelihood of alternative transactions being available, based on the advice of its advisors, given SIRI's ownership position and given the agreements with SIRI, including its governance agreement (which provides SIRI with consent rights in respect of, among other things, a merger or sale transaction) and the XM and Sirius license agreements (which are subject to risk associated with, among other things, their extension and the royalty rates thereunder).
  • To date, neither the Company nor its financial advisors have received any indications of interest from third-party buyers including following the Company's press release on February 12, 2016 announcing that it had been approached regarding a potential corporate transaction.
  • As Glass Lewis, a leading independent proxy advisory firm, noted it is "unlikely that a third-party acquisition proposal or alternative transaction would be available to the Company", therefore "the primary alternatives for the Company appear to be either: (i) a buyout offer or other transaction involving Sirius XM [U.S.]; or (ii) maintaining the existing operational and ownership structure with Sirius XM Canada remaining a separate listed company."

Q.         What is the status of negotiations for the renewal of the XM and Sirius license agreements?

License agreement negotiations with SIRI were pre-empted by discussions, initiated by two significant Canadian shareholders, relating to the potential restructuring of the Company as a possible solution to the increasing number of issues between SIRI and the Company.

  • In April 2015, at the instruction of the Board, the independent chairman of the Board reached out to SIRI to commence discussions regarding renegotiation of the royalty rates payable under the Sirius license agreement due to expire and subject to renewal in 2017.
  • The commencement of those license agreement discussions with the Company was pre-empted by shareholder discussions about restructuring the Company and, as a result, there have been no license agreement negotiations between the Company and SIRI to date.
  • In July and August, 2015, at the initiation of Obelysk Media Inc. ("Obelysk") and Slaight, representatives of each of SIRI, Obelysk and Slaight had preliminary and confidential discussions relating to possible solutions to the increasing number of issues between SIRI and the Company. Such discussions focused on long term solutions, and included consideration of whether the business could be restructured in a manner that would provide a liquidity opportunity to all shareholders, comply with Canadian ownership and regulatory requirements, and better align the interests of the Company and SIRI. These discussions between SIRI, Obelysk and Slaight ceased by the end of August 2015 and did not lead to any agreement or understanding among such parties.
  • Following August 2015, there were periodic, preliminary and high-level discussions among the members of the Purchaser Group (including the Board nominees of Obelysk and Slaight), of which management and the non-interested directors were periodically made aware. However, the Company was not aware of any consensus among the members of the Purchaser Group during such period as to the terms of any proposed transaction or participation by the members in any such transaction. National Bank Financial Inc. became aware of such discussions in November 2015. When the term sheet regarding a proposed going private transaction was received by the Company on February 2, 2016, a Special Committee of the Board was established promptly thereafter. The Special Committee then retained its advisors and commenced the over three month process of negotiating and settling the proposed privatization transaction, which was entered into on May 12, 2016.

Q.         Is CBC involved in the Arrangement?

CBC is one of the Company's significant Canadian shareholders and previously announced that it intends to vote for the Arrangement and to sell 100% of its 13,056,787 Class A Shares for the cash consideration on the same terms available to all of the other minority shareholders.

  • CBC is involved with the transaction only in its capacity as a holder of the Company's publicly traded Class A Shares and is being treated identically to public shareholders on a per security basis.
  • Following the Company's receipt of a non-binding term sheet from SIRI in February 2016, which contemplated the continued involvement of one or more of the Company's significant Canadian shareholders in contemplation of the CRTC Canadian ownership requirements, advisors to the Special Committee contacted each of Obelysk, Slaight and CBC to discuss the non-binding term sheet and whether they would support the proposed going private transaction. All three shareholders indicated their preference to sell all of their equity interest in the Company as part of a proposed privatization transaction.
  • In late April 2016, the Special Committee met and was advised that (a) Obelysk and Slaight would agree to retain equity in the private company in order to facilitate the proposed transaction, given CRTC Canadian ownership requirements, and would dispose of their remaining equity interest in the Company on the same terms as the Company's minority shareholders, and (b) CBC indicated that it would not participate in the ownership of the Company following a privatization and that, like other minority shareholders, would consider the price being offered to the public and the advice of its financial advisor.
  • CBC was not party to any discussions or negotiations related to the preparation of the non-binding term sheet, Arrangement Agreement, the Post-Closing Agreements (as defined in the Circular), or any other transaction documents contemplated in the non-binding term sheet presented by SIRI in February 2016. CBC is also not entitled to receive, as a consequence of the Arrangement, any collateral benefit. CBC's existing contractual arrangements will not be affected by the Arrangement; and no commitments in respect of such contractual arrangements were made, or offered, to CBC in connection with the Arrangement.

Q.         If the Arrangement is completed, what will happen to the existing licensing and other services agreements between SIRI and the Company?

If the Arrangement is completed, minority shareholders will not be impacted by the commercial arrangements between SIRI and the privatized Company.

  • As contemplated by the non-binding term sheet received by the Company in February 2016, and subject to approval by the CRTC, the members of the Purchaser Group have agreed, pursuant to the terms of their voting support agreements, upon forms of the Post-Closing Agreements (including the Services Agreement and the Advisory Services Agreement) that would be executed on completion of the Arrangement and would become obligations of the privatized company.
  • If the Arrangement is completed, the Services Agreement and Advisory Services Agreement will replace the existing XM and Sirius license agreements and will create better strategic and economic alignment between SIRI and the privatized company.
  • If the Arrangement is completed, the Post-Closing Agreements will only impact the privatized company. The terms of the proposed Post-Closing Agreements, forms of which have been negotiated and agreed, subject to regulatory approval, between the members of the Purchaser Group who will be the sole shareholders of the privatized company following completion of the Arrangement.

Q.         What is the status of the exemptive relief application with the OSC relating to exchangeable shares?

The Company has filed the necessary materials with the OSC relating to the exemptive relief application. The relief relates to Canadian continuous disclosure and insider reporting obligations related to the Company post-amalgamation and formal valuation obligations. If the Company is not able to receive exemptive relief on terms acceptable to the Company and SIRI, no exchangeable shares will be paid pursuant to the Arrangement and holders instead will be limited to receiving cash and/or SIRI shares depending on their election. No assurances can be provided as to whether such exemptive relief will be granted. The recommendation to vote FOR the Arrangement as set out in the Circular is not affected by the availability of the exchangeable share consideration pursuant to the Arrangement.

The special meeting of shareholders (the "Meeting") of the Company is scheduled for Tuesday, August 30, 2016 at 10:00 a.m. eastern time at the TMX Broadcast Centre, Exchange Tower, 130 King Street West, Ground Floor, Toronto, Ontario, M5X 1J2.

Votes must be submitted not later than 10:00 am eastern time on August 26, 2016, or if the Meeting is adjourned or postponed, prior to 10:00 am eastern time on the second business day before any adjourned or postponed Meeting.

SiriusXM Canada encourages Company shareholders to carefully read the Circular as it contains important information. The Circular is available on SEDAR at and on the Company's dedicated transaction website at The Circular was also mailed to all shareholders of record on July 29, 2016.

How to Vote

Registered Shareholders: vote by mail, fax, phone, online or in person at the special meeting.





CST Trust Company, P.O. Box 721
Agincourt, Ontario

M1S 0A1

Local: 416-368-2502

Toll free:

Toll free:




Non-Registered Shareholders: intermediaries are required to forward the materials and to seek voting instructions in advance of the Meeting.

For questions about the information contained in the Circular, or for assistance in completing the form of proxy or letter of transmittal and election form, please contact the proxy solicitation and information agent, D.F. King, toll free at 1-866-822-1238 (1-201-806-7301 by collect call) or by email at or the Company's transfer agent and depositary, CST Trust Company at 1-800-387-0825 or by email at Alternatively, for up-to-date information and convenience in voting please visit the website:

Cautionary Statement Regarding Forward-Looking Statements

Certain statements made in this press release are forward-looking statements. These statements include, without limitation, statements relating to the proposed recapitalization of the Company in a go-private transaction, approval of the Arrangement by Company shareholders, voting support and consideration elections by significant shareholders (including elections by Slaight and CBC), the forms of consideration available to Company shareholders, the effect of the Arrangement on the Company and shareholders, the effect of the Arrangement not being completed on the Company and shareholders and other statements that are not historical facts.

Forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements. As a result, we cannot guarantee that any forward-looking statement will materialize and we caution you against relying on any of these forward-looking statements. For a description of relevant assumptions and risks, please consult the Circular, XSR's 2015 Annual Information Form dated November 30, 2015, XSR's 2016 Third Quarter MD&A dated July 13, 2016, and XSR's news release dated May 13, 2016 announcing the Arrangement, all filed with the Canadian provincial securities regulatory authorities (available at and which are also available on the Company's website at Additional details regarding the Arrangement are disclosed in the Circular.

The forward-looking statements contained in this press release describe our expectations at the date of this press release and, accordingly, are subject to change after such date. Except as may be required by Canadian securities laws, we do not undertake any obligation to update or revise any forward-looking statements contained in this press release, whether as a result of new information, future events or otherwise.

About SiriusXM Canada

Sirius XM Canada Holdings Inc. (TSX: XSR) operates as SiriusXM Canada. SiriusXM Canada, with more than 2.7 million subscribers, is the country's leading audio entertainment company and broadcasts more than 130 satellite radio channels featuring premier sports, news, talk, entertainment and commercial-free music. SiriusXM Canada offers an array of content from the most recognized news, entertainment and major sports brands including the NHL, NFL, NBA, MLB, NASCAR, CNN, CBC, FOX, BBC, Howard Stern, Disney, Comedy Central and more.

SiriusXM programming is available on a variety of devices including pre-installed and after-market radios in cars, trucks and boats, smartphones and mobile devices, and consumer electronics products for homes and offices. SiriusXM programming is also available online at and on Apple and Android-powered mobile devices.

SiriusXM Canada has partnerships with every major automaker and its radio products are available at more than 2,500 retail locations nationwide. To find out more about SiriusXM Canada, visit our website at

SiriusXM Canada has been designated one of Canada's 50 Best Managed Companies seven years in a row and is currently a Platinum Club Member, in addition to 2013, 2014 and 2015 rankings in PROFIT 500's list of Canada's Fastest Growing Companies.

Join SiriusXM Canada on Facebook at, on Twitter at and on Youtube at

SOURCE SiriusXM Canada

For further information: Odeta Kellici, SiriusXM Canada, Tel: 416-513-7416,; Kristen Dickson, NATIONAL Equicom, Tel: 416-848-1429,; D.F. King, Tel: 1-866-822-1238 toll free in North America,

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890