UPDATE 1-New Independent News bond extension seen-source

* Company declines to comment

* Investors shrug off possible extension; fear dilution

(Adds quotes, more detail)

DUBLIN, Aug 19 (Reuters) - Independent News & Media INME.I will likely agree another extension to a standstill deal with holders of a 200 million euro ($283 million) bond originally due for repayment in May, an industry source said on Wednesday.

The Irish publishing group has until Aug. 27 to agree a deal with holders of the senior debt but the industry source, who declined to be named because talks are ongoing, said another rollover was inevitable as this month’s deadline looms.

“Even if a deal was to be done tomorrow, a standstill agreement would probably be necessary because we are so near the current deadline,” the source said.

The Irish Times newspaper, without citing any sources, said formal proposals for a fresh extension will be discussed on Wednesday in a conference call.

A spokesman for Independent News declined to comment on the report.

Shares in the company, which owns newspapers and radio stations across Asia, Africa, the UK and Ireland, were down nearly 3 percent at 27 cents, underperforming a general index .ISEQ that was around half a percent weaker.

The stock has lost more than 80 percent of its value over the past 12 months as investors fret over the company’s 1.4 billion euros debt pile and the impact of a meltdown in global advertising revenues.

Around 50 million euros of Independent News & Media’s bank debt falls due next month.

Oliver Gilvarry, an analyst with Dolmen Stockbrokers in Dublin, said the market would take a fourth extension to the standstill agreement in its stride but there were concerns about the sort of final deal that would be agreed.

“The shares are reflecting that equity may have to be raised to support the company and to pay off debt, or will there be a debt-for-equity swap?” said Gilvarry. “Everyone is waiting for news to come through.”

Last month, Irish telecoms tycoon Denis O’Brien, who has a 26 percent stake in Independent News, warned that the future of the publisher hung in the balance as talks dragged on. ($1=.7074 Euro) (Reporting by Carmel Crimmins; Editing by David Holmes and Simon Jessop)