Shareholder warns on future of Independent News -paper

DUBLIN, July 26 (Reuters) - A key shareholder in Independent News & Media (INME.I) warned on Sunday that the future of the indebted publisher hung in the balance as talks with lenders over a 200 million euro bond dragged on.

In an interview with The Sunday Times newspaper, Irish telecoms tycoon Denis O'Brien said examinership, in which a company gets court protection from creditors for a specified period while it tries to negotiate a settlement, was an option for the media conglomerate.

"We'll have to consider it. I am being very clear," said O'Brien, who is the group's second-largest shareholder, with a 26 percent stake.

But O'Brien said the costs of examinership would be prohibitive for the Irish company, which has a debt pile of around 1.4 billion euros.

"I think that for the scale of the business, it just can't afford it."

Independent News & Media said on Friday that it had rolled over a standstill deal with bondholders on the 200 million senior bond until Aug. 27, the third extension in as many months.

Talks to resolve the payment of the bond, which was due in May, have been bogged down in arguments with the equity holders, including O'Brien.

Independent has said it hoped to raise up to 150 million euros from disposals of non-core assets, including its outdoor advertising firm in South Africa, INM Outdoor, to help pay some of its debts.

But O'Brien said he would block any sale of that business, which Independent News & Media said would happen before the end of September.

"I'm against it," he said, adding that South Africa had a "hell of a good media market".

"The earnings in the outdoor business are growing at 20 percent a year. It's a great business. It doubles in four years."

O'Brien has long been at loggerheads with Independent News over its corporate strategy, but an uneasy truce was hammered out in March after Anthony O'Reilly, then chief executive, said he would hand over the reins to his son Gavin.

In the past month, Independent has raised 37 million euros from selling a stake in an online gambling business and cutting its interest in an Indian publishing group.

Independent has also proposed holding a "deeply discounted" rights offering that according to an industry source would raise up to 60 million euros if approved. [ID:nLM666059] (Reporting by Carmel Crimmins, editing by Will Waterman)