INDEPENDENT NEWS & Media (INM) is on the cusp of a “standstill” pact with its bondholders, which would give the company breathing space until late June to reorganise its debt.

Unable to repay a €200 million bond that falls due on Monday, the company is racing against time this weekend to secure an extension on the maturity of that debt in exchange for a small cash repayment and enhanced credit terms.

Although INM was said last night to have persuaded most of its bondholders to sign up for an extension, efforts are ongoing to convince the remaining holders to approve the standstill deal.

The proposal under discussion would provide INM with a period of grace until June 26th to step up efforts to deleverage its balance and sell assets. Holders of the €200 million bond include Pioneer, Invesco and Aviva, but it is not known who among them has already agreed to the deal.

Dominant on the other side of the table are INM’s biggest shareholders, former rivals Denis O’Brien and Sir Anthony OReilly.

INM shares, down more than 84 per cent in 12 months, rose by 3½ cent yesterday to close at 31 cent in Dublin. This was interpreted in some quarters as a mark of confidence among investors that an agreement was close.

Last month INM warned of a “strong likelihood” that the firm would breach banking covenants “if an amendment or waiver is not granted by the lenders in advance”. However, its directors have also said they were confident an agreement could be reached with bondholders and banks.

INM wants to extend the maturity of the €200 million debt and that of a further €590 million, due later this year and next. Another €591 million falls due in 2012.

The negotiation of the extension comes against the backdrop of efforts by INM to sell its South Africa-based advertising business INM Outdoor and its interests in price comparison firm Verivox and gaming software firm Cashcade. INM has said it expects to raise between €100 million and €150 million from the sale of these assets, but not until the end of the third quarter of the year.

Also on the table is the possible disposal of the London Independent daily and Sunday newspaper titles and the sale of its 20.8 per cent stake in Indian newspaper publisher Jagran Prakashan.

INM failed late last year to sell its 39 per cent interest in Sydney publisher APN News Media.