Feb. 13 (Bloomberg) -- Sirius XM Radio Inc., facing repayment on $175 million in bonds next week, said it may be forced to file for bankruptcy as early as Feb. 17 if it can’t reach an agreement to refinance debt.

Sirius XM said today in a statement it exchanged some convertible bonds due in December 2009 for senior secured notes maturing in June 2011. The $175 million in bonds due Feb. 17 are held by Charles Ergen’s EchoStar Corp., which has been buying some of Sirius XM’s debt after the company turned down an unsolicited takeover offer, a person familiar with the plan said Feb. 10.

Sirius XM Chief Executive Officer Mel Karmazin is also in talks with John Malone’s Liberty Media Corp., which controls the satellite-television company DirecTV Group Inc., about a possible transaction, people with knowledge of that matter said. An accord with either Ergen or Malone may prevent a bankruptcy filing.

The New York Post reported tonight that Malone has offered Sirius a bridge loan of several hundred million dollars to pay the debt maturing next week, citing a person close to the situation.

“There’s an array of possible solutions now including the Liberty Media white knight trying to counter Ergen,” David Joyce, an analyst at Miller & Tabak Co. in New York, said in an interview. “It’s still up in the air whether they head to bankruptcy or prepackaged bankruptcy or if there’s any value that could be left for common shareholders.”

Joyce cut his rating on the shares to “sell” today and doesn’t own any.

The shares rose 3 cents to 10 cents at 5:19 p.m. in Nasdaq Stock Market trading. The stock has plunged 94 percent since Karmazin, 65, completed the merger of Sirius and XM in July. Sirius XM has about $3.25 billion in total debt.

Debt Exchange

The company said today it exchanged about $172.5 million of its convertible senior notes. The amount is almost half of the $400 million in notes Sirius XM had maturing at yearend.

Investors who bought the senior secured notes will be paid a fee of $9.45 million, with $5.07 million paid in cash and $4.38 million in common stock, according to the statement.

The senior secured notes will pay interest of 10 percent until Dec. 1, then 10 percent in cash plus 2 percent in additional debt until December 2010, and thereafter will pay 10 percent in cash and 4 percent in additional debt, the statement said.

Sirius’s $500 million of 9.625 percent notes due in 2013 rose 5.5 cents to 46 cents on the dollar, their highest price since September, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields about 36 percent, or 34 percentage points more than similar-maturity Treasuries, Trace data show. A year ago, the notes traded at 85 cents.

‘Cage Match’

Karmazin is pitting Malone and Ergen against each other to save the company he formed almost seven months ago. Malone and Ergen, both based in Englewood, Colorado, control the largest and second-largest satellite-TV broadcasters respectively and could use Sirius XM’s capacity to integrate radio and TV services, according to Fred Moran, an analyst at Stanford Group.

Over the decades, the two men have competed for customers and over acquisitions. In 2003, Ergen, 55, abandoned a bid on DirecTV’s then-parent company, Hughes Electronics Corp.

“John Malone and Charlie Ergen would both be absolutely satisfied to put down the other in a public way,” Bishop Cheen, a bond analyst at Wachovia Securities in Charlotte, North Carolina, said in an interview. “They’re natural cage-match contestants. This is media theater at its best.”

Patrick Reilly, a spokesman for Sirius XM, declined to comment yesterday, as did Marc Lumpkin, a spokesman for EchoStar. Robert Mercer, a spokesman for El Segundo, California-based DirecTV, said the company doesn’t comment on speculation.

Calls to Ergen’s and Malone’s offices weren’t returned.

“These are three of the most cunning negotiators on the planet,” said Chris Marangi, an analyst for Rye, New York-based Gabelli & Co., whose affiliate Gamco Investors Inc. owns Liberty and EchoStar shares. “It’s logical for Karmazin to pick up the phone and call Malone. There are very few people in the world who know the value of the subscriber business and the spectrum and can come up with the financial engineering to pull it all off.”