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UPDATE 2-Sirius, Liberty Media near deal - source
(Recasts paragraphs 1-3 with new sourcing)
PHILADELPHIA Feb 16 (Reuters) - Liberty Media (LINTA.O) is close to finalising a deal to buy a major stake in Sirius XM Radio Inc (SIRI.O) that would spare the satellite radio from bankruptcy, a source familiar with the situation said on Monday.
The discussions involve Liberty helping Sirius with the debt it owes and, in return, getting just under half a stake in the company, the source said.
The details remained unclear, but the investment would "be enough to cover a significant chunk of debt owed (by Sirius) this year," the source said.
"The management of Sirius XM is continually working to ensure the best possible outcome for the enterprise," a spokesman for Sirius said and declined to comment further.
Sources told Reuters last week Liberty Media was talking to Sirius about a plan to invest in the satellite radio company but not take it over. The timing of an agreement was unclear.
The Wall Street Journal said a group of Sirius creditors will seek to remove Chief Executive Mel Karmazin if the company chooses a bankruptcy filing over a deal with an investor that would let it stay solvent.
"Creditors will act quickly and definitively if they perceive that management is (not) acting ... in the best interest of the estate," the paper quoted Edward Weisfelner, a partner with Brown Rudnick LLP - the law firm representing the creditor group - as saying.
The talks with Liberty are seen as a last-ditch attempt by Karmazin to hold off EchoStar, which holds $175 million in Sirius convertible bonds due on Feb. 17.
Sirius said it had refinanced some debt that was due in December, but added that it still might have to file for Chapter 11 bankruptcy protection if talks toward refinancing other debt did not yield results by Tuesday. [ID:nN13519730] (Reporting by Ramya Dilip in Bangalore, Franklin Paul and Jui Chakravorty in New York and Jessica Hall in Philadelphia; Editing by Christian Wiessner and Anshuman Daga)
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