How about a new 200 amp 40 circuit panel? Feed old panel with 125 amp breaker from new panel. Separate neutrals and grounds in old panel, remove bonding screw/jumper. Locate new panel close to new addition, feed old panel with SER. Grounding electrode conductors will need to be re-routed/replaced and connected to main disconnect outside by meter.
Meter base will likely need to be replaced as well. I like the combo meter/main units, they are neater.