Telegraph court showdown adjourned after Barclays offer Lloyds £1.16bn

Business

A court hearing to liquidate a Barclay family holding companies in order to smooth a sale of The Daily Telegraph is poised to be adjourned after a last-gasp offer to repay more than £1bn to Lloyds Banking Group.

Sky News understands that a hearing scheduled to take place in the British Virgin Islands on Monday is expected to be postponed while the bank considers the Barclays’ latest effort to end the auction of the broadsheet newspapers.

An application to adjourn the hearing was submitted late on Friday.

Sources said this weekend that the Barclay family hoped to deliver a full repayment of its long-standing debt to Lloyds by the end of the month.

The adjourned court hearing would be expected to take place shortly after that date if the Barclays do not succeed in repaying the £1.16bn.

Initial offers for the Telegraph and Spectator are due on 28 November, with the billionaire hedge fund tycoon Sir Paul Marshall and Daily Mail proprietor Lord Rothermere among the bidders.

Sky News revealed on Friday that RedBird IMI, an investment vehicle run by Jeff Zucker, the former CNN chief, is backing the Barclay family’s £1bn-plus bid to regain control of The Daily Telegraph.

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RedBird IMI would lend approximately £600m to the family, with the balance of the debt being funded by a member of the Abu Dhabi royal family – said to be Sheikh Mansour bin Zayed Al Nahyan – the ultimate owner of a controlling stake in Manchester City Football Club.

If Lloyds is satisfied about the provenance and scale of the funding available to the Barclays, it would accept the debt repayment, thereby ending the auction process.

Mr Zucker’s credibility means that his partnership with the Barclays therefore has the potential to radically alter the dynamics of the Telegraph’s journey to new ownership.

Mr Zucker is one of the world’s most prominent media executives, having served as president of CNN for nine years before his departure last year.

Nevertheless, rival bidders and Conservative MPs have begun to raise questions about the appropriateness of the Telegraph being financed largely by Middle Easter investors.

Sir David Barclay (left) and his twin brother Sir Frederick after receiving their knighthoods from the Queen at Buckingham Palace
Image:
Sir David Barclay (L) who died in 2021 and his twin brother Sir Frederick received knighthoods at Buckingham Palace in 2000

Neil O’Brien, the MP for Harborough, said on Friday: “The Telegraph and Spectator are two of our most prestigious publications.

“Naturally there’s interest from around the world in gaining control of them.

“I hope [the government] will scrutinise the financing and ownership structure of any deal closely and put them through the usual PIIN process.”

There have been repeated questions in recent weeks about whether bids for the influential and traditionally Conservative-supporting Telegraph newspapers financed by Gulf investors would trigger a government probe.

Danny Kruger, a backbench Conservative MP with links to another of the Telegraph bidders, the hedge fund tycoon Sir Paul Marshall, wrote to the culture secretary, Lucy Frazer, to urge her to issue a Public Interest Intervention Notice (PIIN) into the funding.

Lloyds, which forced the Telegraph and Spectator magazine’s holding companies into receivership more than five months ago, has been engaged in a long-running stand-off with the family over its borrowings.

The success of the Barclays’ offer to repay its debt in full to Lloyds will also rest on the outcome of RedBird IMI’s due diligence.

The Barclays have made a series of increased offers in recent months to head off an auction, raising its proposal last month to £1bn.

Lloyds, however, has repeatedly told the family and its advisers that they should either repay the debt in full or participate in the auction alongside other bidders.

Talks orchestrated by Goldman Sachs, the investment bank, have now kicked off with prospective buyers, who also include the London-listed media group National World.

The new board of the Telegraph holding company has established an incentive plan to keep key employees motivated during the sale process, with collective financial rewards totalling millions of pounds.

Until June, the newspapers were chaired by Aidan Barclay – the nephew of Sir Frederick Barclay, the octogenarian who along with his late twin Sir David engineered the takeover of the Telegraph 19 years ago.

Lloyds had been locked in talks with the Barclays for years about refinancing loans made to them by HBOS prior to that bank’s rescue during the 2008 banking crisis.

The family’s debt to Lloyds also includes some funding tied to Very Group, the Barclay-owned online shopping business.

Ken Costa, the veteran City banker who advised the Barclay brothers on their purchase of the Telegraph in 2004 and counts the sale of Harrods to Qatar Holding among his other flagship deals, is acting as a strategic adviser to the family.

The Telegraph and Spectator disposals are being overseen by a new crop of directors led by Mike McTighe, the boardroom veteran who chairs Openreach and IG Group, the financial trading firm.

Mr McTighe has been appointed chairman of Press Acquisitions and May Corporation, the respective parent companies of TMG and The Spectator (1828), which publish the media titles.

In July, Telegraph Media Group (TMG) published full-year results showing pre-tax profits had risen by a third to about £39m in 2022.

A successful digital subscriptions strategy and “continued strong cost management” were cited as reasons for the company’s earnings growth.

“Our vision is to reach more paying readers than at any other time in our history, and we are firmly on track to achieve our 1 million subscriptions target in 2023 ahead of our year-end target,” said Nick Hugh, TMG chief executive.

Lloyds and a spokesman for the Barclay family declined to comment on Saturday.

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