CORRECTED - CORRECTED-Australia's IBA says in talks with UK's iSoft

(Corrects paragraph 2 to show funding would be used to refinance iSoft's debt facilities, not IBA's)

SYDNEY, Feb 16 (Reuters) - Australian health information company IBA Health Ltd. IBA.AX said on Friday it was in talks with Britain's iSoft Group Plc IOT.L, which could lead to IBA making a recommended takeover offer for iSoft. IBA said in a brief statement to the Australian Stock Exchange that it was also in talks to obtain suitable funding, which would refinance iSoft's existing debt facilities.

ISoft said on Thursday it was continuing to consider a number of options following reports that the preferred buyer of the British software firm had put takeover talks on hold.

The Times reported on Wednesday that U.S. drug wholesaler McKesson Corp. (MCK.N) was understood to be the front-runner, but the newspaper said talks with iSoft's key contractor had broken down over contract conditions, casting a shadow over the 200 million pounds ($393 million) deal.