Feb. 17 (Bloomberg) -- Liberty Media Corp. may say as soon as today that it will provide hundreds of millions of dollars to Sirius XM Radio Inc. and help the pay-radio company avert bankruptcy, a person familiar with the matter said.

John Malone's Liberty Media is still negotiating a rescue for Sirius XM, said the person, who declined to be identified because the talks are ongoing and an agreement may not be reached. Sirius XM said last week it may be forced to file for bankruptcy as soon as today if it can’t refinance debt.

Sirius XM faces a deadline today to repay $175 million in bonds held by Charles Ergens EchoStar Corp., a satellite- equipment company. Either Ergen or Malone, who control the two largest U.S. satellite-television companies, would be able to use New York-based Sirius XM to integrate TV and radio services.

Patrick Reilly, a spokesman for Sirius XM, declined to comment. Liberty Media spokeswoman Courtnee Ulrich didn’t return a phone call and an e-mail seeking comment.

Under the deal being negotiated, Malone may pay Sirius XM $265 million in return for board seats and a minority stake in the company, the New York Times reported yesterday, citing people familiar with the talks. Malone may then pay another $200 million to Sirius XM later this year, the newspaper said.

Such an agreement would allow Chief Executive Mel Karmazin to keep his job, the Times said. A group of Sirius XM creditors said yesterday it plans to seek Karmazin’s removal if the company files for bankruptcy instead of making a deal to remain solvent.

“Creditors believe that a precipitous bankruptcy filing will not be in their best interests,” said Edward Weisfelner, a lawyer with Brown Rudnick LLP who’s representing the creditors, in a phone interview. “Our group is concerned that management not use the threat of bankruptcy as a negotiating tool.”

Convertible Bonds

Sirius XM exchanged about $172.5 million of its convertible bonds due December 2009 for senior notes maturing in June 2011, it said in a statement last week. The amount is almost half of the $400 million in notes the company had maturing at yearend.

The shares rose 3 cents to 10 cents on Feb. 13 in Nasdaq Stock Market trading. The stock has plunged 94 percent since Karmazin, 65, completed the all-stock takeover of larger rival XM Satellite Radio Holdings Inc. by Sirius in July.

Since September, the stock has traded for less than $1 a share as investors became concerned that Karmazin wouldn’t be able to manage the debt or meet growth projections. Sirius XM has about $3.25 billion in total debt.

The company has spent millions in recent years to carry programming from “shock jock” :Howard Stern and professional sports leagues. The five-year agreement with Stern, which began in January 2006, cost $500 million and includes stock-based incentive payments based on subscriber goals.