By Jui Chakravorty Das
NEW YORK (Reuters) - Liberty Media Corp
Sirius XM's talks with Liberty are seen as a last-ditch attempt by Sirius chief Mel Karmazin to stave off the takeover bid by Charles Ergen's EchoStar, which holds $175 million in Sirius convertible bonds due on February 17.
Liberty's discussions with Sirius were friendly and did not involve a takeover of the company or a buyout of the equity, the source told Reuters.
Sirius said on Friday it had refinanced some of its debt that was due in December, but added that it still might have to file for Chapter 11 protection if talks toward refinancing other debt did not yield results by Tuesday.
Any possible agreement could include a loan to Sirius, or paying off its debt, or assuming the debt obligations. On Friday, the New York Post reported on its Web site that Liberty had offered a bridge loan of several hundred million dollars to help pay off the debt maturing Tuesday.
The newspaper, citing a source close to the situation, said Liberty would provide Sirius CEO Mel Karmazin with enough cash to repay the $175 million in debt. That gives Liberty three months to come up with a plan to help restructure roughly $600 million in Sirius XM debt coming due in May and December.
Another person familiar with the talks told Reuters both EchoStar and Liberty Media were continuing intense discussions with Sirius XM.
The talks with EchoStar are more of a hostile nature while Liberty's talks are cooperative with Sirius management, but the outcome remained uncertain, the sources said.
Liberty and EchoStar declined to comment. Sirius did not return calls for comment on Friday.
"The company is in discussions with others with respect to transactions that could refinance some of its ... indebtedness," Sirius said in a statement.
"If these transactions are not consummated, it may be forced to file for bankruptcy as early as February 17, 2009."
SIRIUS RISES
Shares of Sirius rose 23 percent, to 12.9 cents in extended trading, after closing up almost 42 percent on Nasdaq.
The shares had lost nearly all their value since Sirius Satellite Radio completed its acquisition of XM Satellite Radio in July.
Sirius, which has a total debt load of about $3.25 billion, began planning to refinance its debt following its merger with rival satellite-radio operator XM, which was approved last July. But the credit markets froze shortly thereafter.
Ergen, who owns satellite companies EchoStar Corp and Dish Network Corp
Sirius, facing a slowdown in retail demand for its radios and the downturn in the automobile industry where it gains most of its new subscribers, has to consider all options in an effort to control costs.
Liberty Media is in the process of splitting off most of its Liberty Entertainment
Some media reports had suggested DirecTV was in talks with Sirius, but a source said the discussions are with Liberty Media's management and not with that unit.
(Additional reporting by Franklin Paul and Yinka Adegoke; Editing by Phil Berlowitz, Brian Moss, Richard Chang)
