Yahoo Finance Barclay family bid to regain control of The Telegraph with Gulf cash
The Barclay family have made an offer to repay in full a £1.2bn debt to Lloyds Banking Group and reassume control of The Telegraph in a potential deal backed by Manchester City owner Sheikh Mansour bin Zayed.
RedBird IMI, a media investment vehicle led by the former CNN chief Jeff Zucker and partly funded by Sheikh Mansour, has agreed to lend the Barclay family the full sum. There would be no direct investment in the deal from the Abu Dhabi royal family.
The Telegraph and The Spectator magazine are currently controlled by Lloyds after it sent in receivers in June to recover a longstanding debt which had been secured against them. Repayment of the debt in line with terms issued to a Barclay family holding company in the British Virgin Islands would end the receivership and deliver the titles back under Barclay family control.
It is understood that RedBird IMI is not in line to take any shares in The Telegraph under the initial terms of the new loan. It was not clear what conditions do apply, including what security over the assets will be taken and whether the debt might be converted to equity in time.
Such details are likely to be at the centre of any debate over whether repayment of the Lloyds debt with a loan from RedBird IMI should trigger regulatory scrutiny. A figure of £1.2bn is double the top end of what analysts forecast that The Telegraph would fetch on the open market.
A source familiar with RedBird IMI said: “Jeff Zucker is a serious figure and of course people will assume he’s going to be involved in the business. They are investors for growth and have been looking for media assets with global potential.”
However it is understood there are no plans for RedBird IMI to take seats on the board of The Telegraph.
Mr Zucker resigned from CNN last year after failing to disclose a relationship with a marketing executive at the channel. After a long stint at NBC, which is viewed as leaning to the left of US politics, he led CNN to success with combative coverage of Donald Trump’s candidacy and presidency.
The Barclay family’s Zucker-backed offer threatens to derail an ongoing auction of The Telegraph being run by Goldman Sachs. Bidders including a consortium led by the hedge fund chief Sir Paul Marshall, the Daily Mail publisher DMGT and local newspaper group National World have lined up to bid.
Lloyds has signalled in that process that no more than 25pc of the ultimate purchase price may be funded by investment from the Middle East, owing to the risk it would trigger lengthy regulatory reviews of the impact new owners might have on the public interests in free expression.
At more than 25pc a Gulf owner could also trigger the National Security and Investment Act, which hands the Government sweeping powers to block takeovers.
The Conservative backbencher Danny Kruger, an ally of Sir Paul, has argued in a letter to the Culture Secretary that the Barclay family’s plans to tap Gulf investment to repay the debt to Lloyds raises similar concerns.
Mr Kruger wrote: “If material influence over, or control of, a quality national newspaper was passed to an unknown foreign ruler at any time it would raise concerns, but at a heightened time of geopolitical turmoil I believe it is more important than ever that this deal for a treasured national asset is given proper scrutiny.”
Mr Kruger questioned why “the amount of the loan… is far beyond what The Telegraph and The Spectator could commercially support”. It is understood the loan payments would be made from across the Barclay family’s businesses.
Conservative MP Neil O’Brien, who left the Government in this week’s reshuffle, today echoed those concerns.
He said: “The Telegraph & Spectator are two of our most prestigious publications. Naturally there’s interest from around the world in gaining control of them. I hope [the Department of Culture, Media and Sport] will scrutinise the financing and ownership structure of any deal closely.”
The Barclay family have argued there is no basis or precedent for a public interest intervention in a debt transaction.
Their latest offer comes days before a hearing in the British Virgin Islands on Monday at which Lloyds was preparing to re-petition to liquidate Penultimate Investments Holding Company, which is thought to be a keystone of their business empire.
As well as The Telegraph and The Spectator, the Lloyds debt was secured against the online retailer Very and courier Yodel, but they remain under family control.
Lloyds is now considering the offer and seeking more information about the source of the money and how it would be delivered. The auction process continues, with first round bids expected by the end of the month.
Spokesmen for Lloyds, the Barclay family and RedBird IMI declined to comment.
