Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The Barclay family has regained legal ownership of the Telegraph for the next few months, as the newspaper’s prospective Abu Dhabi-backed owner awaits the outcome of a UK government probe into its takeover.
The media group emerged from receivership after six months in the hands of its lender Lloyds Banking Group after the family used cash provided by RedBird IMI to pay off its bad loans.
However the family will not have any control over its operations. Instead, an independent board will oversee the newspaper, and its sister magazine the Spectator, while regulators vet a deal to pass control of the group to RedBird IMI in a debt-for-equity swap.
On Monday the Barclay family paid Lloyds more than £1.1bn to clear their decades-long debts with the bank. About half of this was provided by RedBird IMI in debt structured to be swapped for control of the Telegraph Media Group.
The remainder of the debt was covered by International Media Investments, the investment vehicle backed by Manchester City owner Sheikh Mansour bin Zayed Al Nahyan, which will swap into new debt behind the Barclay family’s remaining business assets such as the Very Group.
A spokesperson for the Barclay family said: “We are pleased to have reached this positive resolution and are grateful to Lloyds Banking Group for their constructive engagement over recent months.”
Lloyds said: “We can confirm the repayment has now completed. We are always keen to work constructively with customers who get into difficulty with their repayments to reach an amicable solution.”
RedBird IMI has already exercised the option to carry out the debt-for-equity swap, although the completion of its takeover will not be finalised until regulators clear the deal.
Redbird IMI, which is run by former CNN president Jeff Zucker but majority owned by an Abu Dhabi fund, has already promised to maintain the Telegraph’s editorial independence after it takes control.
UK culture secretary Lucy Frazer has issued a public interest intervention notice that has tasked Ofcom with scrutinising the proposed takeover of Telegraph Media Group by RedBird IMI.
Ofcom, which has until the end of January to conduct its investigation, has already sent out requests for information to RedBird IMI.
The deal has attracted significant criticism from Conservative politicians, who have raised concerns over the risk to press freedom from a group majority backed by a Middle Eastern government as well as potential national security issues.
Whatever happens to the RedBird IMI process — which, if blocked, could mean the restart of the auction for the titles — the deal is a significant win for Lloyds, which managed to recoup one of the largest bad debts still on its balance sheet that it took on with the takeover of HBOS in the 2008 financial crisis.
The bank had already begun an alternative auction process that was expected to have raised about £600mn, which means that it has managed to double expected proceeds by striking the deal with the Barclay family.
