UPDATE 1-Daily Sport publisher in breach of covenant

* In talks with lending bank, other finance providers

* Bank agrees two month extension to facility

LONDON, Jan 7 (Reuters) - Britain's Sport Media Group Plc (SPMG.L), publisher of the Daily Sport and Sunday Sport tabloid newspapers, said on Wednesday it had been notified by its bank on Tuesday evening that it is in breach of one of its covenants.

The company said it is in negotiations with its bank over revising the terms of its debt but an agreement has not yet been reached. In the meantime, the bank has agreed to provide a two month extension to its current facility.

Sport Media said it is seeking to remedy the breach through further discussions with its existing finance providers and is also exploring a number of alternative financing sources.

"The board believes that a refinancing solution will be reached within the extension period," it said.

Sport Media said it will publish a trading update tomorrow as planned.

(Reporting by Matt Scuffham)