[Federal Register Volume 63, Number 216 (Monday, November 9, 1998)]
[Notices]
[Pages 60418-60419]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29863]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-23514; 812-10734]


CD Radio Inc.; Notice of Application

November 2, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for an order under section 6(c) of the 
Investment Company Act of 1940 (the ``Act'').

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SUMMARY OF APPLICATION: Applicant requests an order exempting it from 
all provisions of the Act until the earlier of one year from the date 
the requested order is issued or the date applicant ceases to be an 
investment company.

FILING DATE: The application was filed on July 22, 1997, and amended on 
August 6, 1998. Applicant has agreed to file an amendment during the 
notice period, the substance of which is included in this notice.

HEARING OR NOTIFICATION OF HEARING: An order granting the requested 
relief will be issued unless the SEC orders a hearing. Interested 
persons may request a hearing by writing to the SEC's Secretary and 
serving applicant with a copy of the request, personally or by mail. 
Hearing requests should be received by the SEC by 5:30 p.m. on November 
27, 1998, and should be accompanied by proof of service on applicant, 
in the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons may request 
notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 5th Street NW, Washington, DC 20549. 
Applicant, 14th Floor, 1180 Avenue of the Americas, New York, NY 10019-
6064.

FOR FURTHER INFORMATION CONTACT:
Lisa McCrea, Attorney Adviser, at (202) 942-0562, or Nadya B. Roytblat, 
Assistant Director, at (202) 942-0564

[[Page 60419]]

(Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch, 450 5th Street, NW, Washington, DC 20549 
(tel. 202-942-8090).

Applicant's Representations

    1. Applicant is a Delaware corporation formed in 1990 and engaged 
in the business of developing a national satellite broadcast system to 
provide digital audio radio service (``Service''). In October 1997, 
applicant was granted a license by the Federal Communications 
Commission (``FCC'') to build, launch and operate the Service.
    2. To obtain the funds needed to pay for the FCC License, in 1997 
applicant completed a public stock offering, a public debt offering, 
and a private placement of its common stock. Pending utilization in 
building the Service, the proceeds of the offerings were used to pay 
for the FCC License and invested in a money market fund, U.S. 
government securities, commercial paper, and a bank certificate of 
deposit.
    3. For applicant to continue to hold the FCC License, applicant 
must satisfy certain progress requirements, including meeting certain 
deadlines for the construction and launch of satellites, and a deadline 
for the Service to be in full operation. Satisfying these requirements 
will require significant expenditures. Applicant currently expects to 
commence operations of the Service by the first quarter of the year 
2000.

Applicant's Legal Analysis

    1. Under section 3(a)(1)(C) of the Act, an issuer is an investment 
company if it ``is engaged or proposes to engage in the business of 
investing, reinvesting, owning, holding, or trading in securities, and 
owns or proposes to acquire investment securities having a value 
exceeding 40 percent of the value of such issuer's total assets 
(exclusive of Government securities and cash items) on an 
unconsolidated basis.'' Section 3(a)(2) of the Act defines ``investment 
securities'' to include all securities except government securities, 
and securities which are issued by majority-owned subsidiaries of the 
owner which are not investment companies, and are not relying on the 
exception from the definition of investment company in section 3(c)(1) 
or 3(c)(7) of the Act.
    2. Applicant states that, pending utilization in building and 
operating the System, the proceeds of applicant's offerings of its 
stock may be held in ``investment securities'' within the meaning of 
section 3(a)(2) of the Act. As of June 30, 1998, approximately 44% of 
applicant's total assets consisted of ``investment securities.'' 
Applicant states, therefore, that it may come within the definition of 
investment company in section 3(a)(1)(C) of the Act. Applicant also 
states that it anticipates raising additional funds to complete the 
development of the System, and will place the proceeds in U.S. 
government securities and shares of money market funds to be drawn down 
as needed to complete the construction and operate the System.
    3. Section 6(c) of the Act permits the SEC to exempt any person, 
security, or transaction from any provision of the Act, if and to the 
extent that the exemption is necessary or appropriate in the public 
interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act.
    4. Applicant requests an exemption under section 6(c) from all 
provisions of the Act until the earlier of one year from the date the 
requested order is issued or the date applicant ceases to be an 
investment company. Applicant believes that within this period it will 
have sufficient expenditures of funds on the establishment of the 
Service and the acquisition of non-investment assets to cure its 
temporary status under section 3(a)(1)(C) of the Act.
    5. Applicant asserts that, as a company that was created to build 
and operate the Service, applicant is not the type of entity that was 
intended to be governed by the Act. Applicant states that, since its 
inception, its principal activities have been in technology 
development, pursuing regulatory approval for the Service, discussions 
with radio manufacturers and automakers, market research, design and 
development, development of a mobile demonstration program, contract 
negotiations with satellite and launch vehicle contractors, technical 
efforts with respect to standards and specifications, and securing 
adequate working capital. Applicant thus asserts that the requested 
relief is consistent with the protection of investors and the purposes 
fairly intended by the policy and provisions of the Act.

Applicant's Conditions

    Applicant agrees that the requested exemption will be subject to 
the following conditions:
    1. Applicant will not purchase or otherwise acquire any securities 
other than shares of a money market fund and U.S. Government 
securities.
    2. Applicant will not hold itself out as being engaged in the 
business of investing, reinvesting, owning, holding, or trading in 
securities.
    3. Applicant will allocate and utilize its accumulated cash and 
securities for the purpose of funding its satellite radio system 
business.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 98-29863 Filed 11-6-98; 8:45 am]
BILLING CODE 8010-01-M