It's not just people who are looking to slim down during this time of year. Sirius XM Radio (NASDAQ:SIRI) keeps nibbling away at its debt. In an SEC filing last night, the satellite radio operator announced that it will be issuing 45.2 million shares to redeem $6 million worth of a Sirius convertible note that was due next month.

It may not seem like much, but after a string of deals, that $300 million debt repayment milestone has now been whittled down to just $187.6 million.

The company isn't out of the woods just yet. It still has more than $3 billion in debt on its balance sheet, with $350 million of that due in May and another $400 million by year's end.

However, every week finds the company taking baby steps in tackling this year's refinancing hurdles. Since being granted the authorization last month to have as many as 8 billion shares outstanding, Sirius XM has some of the ammo necessary if it continues to find debt holders willing to swap their bonds for equity.

The challenge for Sirius is to drum up the catalysts to smoke out the shorts and get its stock moving higher. Last night's deal prices the 45.2 million shares at just over $0.13 a share. The dilution will obviously be less painful if the stock heads higher in 2009 as the company barrels through the rest of its tollbooths.

What can those catalysts be? Some of them are beyond its control. Did you hear Chrysler warning that new car sales were slashed by more than half last month? As long as Sirius XM partners like Chrysler, General Motors (NYSE:GM), and Ford (NYSE:F) are struggling to move new automobiles, that will translate into fewer satellite receiver activations.

There are certainly plenty of cash-rich companies in the digital music space like Apple (NASDAQ:AAPL), Yahoo! (NASDAQ:YHOO), and RealNetworks (NASDAQ:RNWK), but they are unlikely to emerge as sugar daddies when they compete with Sirius XM (and any buyout chatter would crush margins).

This shouldn't stop Sirius XM from trying to strike deals with the sexy companies that will get investors excited about Sirius XM's prospects again. There's no time to waste. The clock is ticking.

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Longtime Fool contributor Rick Munarriz is such a fan of satellite radio that he subscribes to both Sirius and XM. He does not own shares in any of the stocks in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.