BANK OF Ireland considers Independent News & Media to be one of its “most challenged corporate relationships”, according to a file note of a meeting on April 5th between the bank and members of the media company’s senior management, including former chief executive Gavin O’Reilly.

This reflected concerns around the indebtedness of INM – €426 million at the end of December 2011 – and the fact it was trying to negotiate a second financial restructuring with its banks since 2009.

The file note, seen by The Irish Times, states the banks expressed concerns about the ability of management to deliver the required loan repayments.

The April 5th meeting had been sought by Mr O’Reilly after he became aware of a conversation that had taken place on March 13th between INM’s then chairman James Osborne and Pat Gaynor of Bank of Ireland.

In a file note presented by Mr Osborne to an INM board meeting in March, the former chairman said Mr Gaynor had informed him that “the overriding view of the bank was that substantial changes to management were required”.

Mr Gaynor said the bank would not officially say this but he was authorised to convey this message to Mr Osborne.

This prompted Mr O’Reilly to contact the bank for an explanation of the comments to Mr Osborne. A face-to-face meeting was held on April 5th at the bank’s office on Burlington Plaza.

INM was represented by Mr O’Reilly and company secretary Andrew Donagher, while Tom Hayes, Pat Gaynor and Tony Martyn attended for Bank of Ireland.

According to INM’s file note of the meeting, the bank’s view was that “INM’s management was seen as operationally good but needing strategic support”.

Bank of Ireland said Mr Gaynor’s earlier comments to Mr Osborne were intended to convey the bank’s view that the strategic management of INM needed to be strengthened. This was intended as “informal assistance” and at no point was there a request from the bank for “regime change”.

The bank said it could not be held responsible for the note, which was prepared by Mr Osborne.

“BoI advised that the banks’s position is that the management of INM is a matter for the board of INM and not something BoI will interfere with,” the file note adds.

However, the bank did make clear its view that INM’s debt level was not sustainable based on 2011 operating profits of €75 million.

It also said INM’s digital business “was not growing quickly enough and that further cost reductions were required”.

It voiced its concern about the short notice given on restructuring INM loans and questioned whether “management appreciated the seriousness of the situation”.

The bank said it was a matter for the INM management to address these issues, not the banks.

Mr O’Reilly resigned from INM on April 19th after agreeing a €1.87 million exit package.

Mr Osborne was voted off the board at INM’s annual meeting last week, after two of the company’s biggest shareholders, Denis O’Brien and Dermot Desmond, voted against his re-election.

INM’s board, which now has just five members, is due to meet this week to consider the appointment of new directors.