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INDEPENDENT News and Media’s (INM) second largest shareholder, Denis O’Brien, has told the company’s board he will not support a proposal to refinance its €200m (£170m) bond which was due for payment today.

Sources close to O’Brien said the Irish businessman is still fully behind the publisher, which owns The Independent and The Independent on Sunday, but that he is not prepared to invest under the terms currently on the table as they provide no long-term security for the company.

The proposal – drawn up by INM’s other major stakeholder and former chief executive Sir Anthony O’Reilly – would see the €200m bond repaid through a €60m deeply discounted rights issue, €50m from asset disposals and by giving the holders of the debt 10 per cent of the company’s shares to settle the remaining €90m.

But 26 per cent stakeholder O’Reilly said that as the company’s debt-pile exceeds £1bn, the proposed solution is like “putting a band aid on a problem that needs major surgery”.

And with the bonds trading at around 25 cents in the euro, he has questioned why the bondholders should receive the full €200m at all.

The Irishman – without whose support a rights issue would certainly fail – is instead pushing to re-pay the bond at a valuation more in-line with the current market, which would mean in the range of €30m to €40m.

And he believes that all of the money that will be raised by asset disposals – thought by analysts to be up to €150m – should be used to pay down debt.

It is understood that the Independent News and Media’s board and its creditors have agreed an extension to the “standstill” period, which expired today, until 24 July.