Yahoo Finance Telegraph faces financial stability threat from Barclay family
The Telegraph would be at risk of financial instability if the Barclay family were to regain control in the wake of the failed takeover backed by the United Arab Emirates, it can be revealed.
Suspicious transactions discovered while the company was placed in receivership by Lloyds Banking Group last year mean that its access to finance could be restricted by the family’s potential comeback.
A loan of £60m from Lloyds to the parent company of The Telegraph and The Spectator magazine, Press Acquisitions Limited, would be threatened with a demand for immediate repayment, sources said.
The borrowing is a normal corporate loan unrelated to the £1.2bn overdue Barclay family debt that prompted the bank to send in receivers. It has never been in default.
It is understood that Lloyds was among the parties involved in The Telegraph’s receivership that made Suspicious Activity Reports (SARs) to the National Crime Agency, which acts as a clearing house and can forward intelligence to authorities including the Serious Fraud Office and HMRC.
The SARs, which have been previously reported, were also made by the independent directors who are still overseeing the company, as well as legal and restructuring advisers, according to multiple sources.
The concerns were triggered by the movement of large sums between The Telegraph and other companies controlled by the Barclay family. The independent directors subsequently called in the specialist law firm BCL to investigate alongside the annual audit of the accounts, conducted by PwC.
Lloyds’ knowledge of the suspicious transactions means it could withdraw financing if the Barclays were to regain control, under its own regulatory obligations and integrity policies.
The family, who have experienced personal and business turmoil in recent years, regained beneficial ownership of The Telegraph in December after paying off their £1.2bn debt to Lloyds with new loans mostly provided by the UAE. As part of the complex deal, RedBird IMI, a US fund majority backed by the Gulf power, acquired an option to take ownership of The Telegraph and The Spectator.
The plan was derailed last month when cross-party action in the House of Lords prompted the Government to outlaw foreign state ownership of UK newspapers in legislation expected to come into force around the end of this month.
Since they regained ownership, the Barclay family have been barred from controlling The Telegraph by measures put in place by the Culture Secretary Lucy Frazer to allow regulatory scrutiny of RedBird IMI’s plans. She kept in place the independent directors, who were originally appointed by Lloyds as part of the receivership.
RedBird IMI is preparing to attempt an onward sale of the option to own The Telegraph, but the process is fraught with complications including the uncertain roles of the Barclay family, the Government and the independent directors in the process. The restrictions that prevent the Barclay family exercising control are on track to fall away as soon as RedBird IMI gives formal notification that it does not intend to pursue a takeover.
The Barclay family declined to comment on the prospect of regaining control or any action that Lloyds might take in response. A spokesman previously said: “The accounts, including to the year ended 31 December 2022, have been fully audited and signed off by PwC.”
Lloyds declined to comment on its loan to Press Acquisitions Limited or SARs linked to The Telegraph.
The Department for Culture, Media and Sport declined to comment.
