Sirius XM Radio Inc. reiterated Friday it may be forced to
file for bankruptcy protection as early as Tuesday as the company
continues refinancing talks for $175 million in bonds that mature
Tuesday. The disclosure came as the debt-laden satellite-radio
provider announced it exchanged $172.5 million in notes that come due
in December for new notes that come due in June 2011.

The Wall Street
Journal reported Friday that Sirius XM has significantly narrowed the
divide in talks with satellite mogul Charles Ergen over a deal to save
itself from bankruptcy. But the country’s sole satellite radio
operator continues to discuss a rival offer from Liberty Media Corp.,
according to people familiar with the situation. Ergen, who controls
Dish Network Corp. (DISH) and EchoStar Corp., began acquiring
Sirius XM debt in the fall. He has offered to inject about $500
million into Sirius XM and restructure the debt he holds in the
company in return for control. His offer is contingent on the
successful renegotiation of about $600 million in Sirius bank loans
and about $200 million in other debt.

Ergen had made an unsolicited
offer to take control of Sirius XM last year, but the company rebuffed
it. Liberty Media, which controls Dish Network rival DirecTV Group
Inc., has said it would make an investment that would enable
Sirius XM to meet its credit obligations in exchange for a sizable
stake, a person close to the situation told the Journal earlier this
week. After Sirius’ merger with rival satellite-operator XM was
approved in July, it began planning to refinance its debt. Yet within
weeks of the deal’s close, the financial crisis began to envelop Wall
Street, making it all but impossible for companies to tap the credit

markets. Sirius shares were recently up 3 cents at 10 cents.