Slather some bittersweet frosting on this layered cake of pessimism. Credit rating agency Moody's is lowering its debt rating on Sirius XM Radio (NASDAQ:SIRI), fearing that the company's poor liquidity will be hard to overcome in light of well more than $3 billion in debt on its books.

It's not the only worrywart, of course. Shares of Sirius haven't traded as low as $0.08 a share this month by accident.

The company is trying.

As of September, the satellite radio provider was staring at three huge debt maturities:

  • In February, a $300 million Sirius convertible is due.
  • In May, $350 million in XM bank debt must be repaid.
  • In December, a $400 million XM convertible is due.

It has already been whittling away at the Sirius convertible, repurchasing the debt or swapping it out for stock. The February toll has now been taken down to $193.6 million in aggregate principal.

Between its present liquidity and its authorization to have as many as 8 billion shares outstanding, Sirius XM has enough ammo to get through February. Now it needs to clear the May and December hurdles.

Renegotiating with creditors is never easy, but buying itself time is the name of the game. Sirius XM expects to break even on a free cash flow basis in 2009, with $300 million in adjusted EBITDA.

Sirius XM is well connected, but many of its allies are struggling. General Motors (NYSE:GM) or Ford (NYSE:F) would be logical companies to approach for a handout in merrier times, but they're too busy panhandling for themselves at the moment. Terrestrial radio operators like CBS (NYSE:CBS), Clear Channel, or Cox Radio (NYSE:CXR) would love to pay up to syndicate some of the signature talent on Sirius and XM through conventional radio, but they're also smarting. 

Music subscription providers like RealNetworks (NASDAQ:RNWK) have the money, but what kind of content outsourcing deal would it take to get in on the Rhapsody parent's balance sheet? Best Buy's (NYSE:BBY) Napster has rubbed elbows with satellite radio before -- it inked a deal two years ago where XM listeners can purchase songs through Napster -- but acquiring a stake in Sirius XM may be a conflict of interest for the consumer electronics retailer.

In short, Sirius XM is likely going to have to get itself out of the debt-laden hole it got itself into. If it succeeds, shares of Sirius XM may be one of the best performers of 2009. If it doesn't, Nil City won't be too far away and Moody's can always say it told you so.

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