The Ron Burkle-controlled Source Interlink Cos. has agreed to terms of around $1.2 billion to take over American Media Inc., but sources say bankers are getting a little skittish.

"The banks want him to put more equity into it," said one source.

Since American Media already has about $1.1 billion in existing debt between bank loans and junk bondholders, a $1.2 billion agreement does little more than refinance the debt at this point.

Also, since The Post broke the story on Oct. 25 that merger talks between the two companies were back on, shares in publicly traded Source Interlink have tanked to new 52-week lows.

At the time the story ran, the stock was trading at $3.64 a share, but by Nov. 9, the stock had spiraled to a new low of $2.06. It has since risen and yesterday closed at $2.48.

Bondholders have about $500 million of the debt in AMI. And as of early this week, AMI has made no move to show them any kind of a deal.

That has at least one bond holder growing increasingly skeptical that a deal can be pulled off in a credit market crunch.

"Stranger things have happened, so you never know," shrugged the bond holder.

In its last talk with bond holders after the last quarterly earnings, AMI Chief Financial Officer Jack Craven indicated that plan B, to get Muscle & Fitness and four other magazines audited and sold off, was still in the cards. Execution of a merger or buyout deal would delay that.