Barclays in ten-day race to repay Telegraph newspaper loan
The former owners of The Daily Telegraph face a formal ten-day deadline to repay more than £1bn. to Lloyds Banking Group or face liquidation of a key holding company.
Sky News has learned that the Barclay family has agreed to repay £1.16bn. to Britain’s biggest high street lender by December 1, with a crucial court hearing in the British Virgin Islands to be held three days later if they fail to do so.
City sources said Barclays had now agreed not to contest the liquidation on December 4 if it does not repay the loans by December 1.
The ten-day scramble to repay its long-standing debt underscores the uncertainty that continues to haunt two of the country’s most influential newspaper titles.
Barclays has struck a deal with RedBird IMI, an Abu Dhabi-backed vehicle, to secure the funding it needs to repay Lloyd’s loans.
Under the deal between them, RedBird IMI, which is headed by former CNN president Jeff Zucker, would then convert its loans into equity and take ownership of the Telegraph and Spectator magazines.
However, the transaction remains subject to Mr Zucker’s team carrying out due diligence, with £600m. of the repayment of the loan secured against the media assets.
A liquidation of penultimate Investments Holding Limited would effectively remove the Barclay family from a role in the Telegraph’s future and leave Lloyds free to pursue an unencumbered auction of the papers.
Bidders for the titles include billionaire hedge fund tycoon Sir Paul Marshall and Daily Mail proprietor Lord Rothermere, with initial bids expected on November 28.
However, a number of suitors are now questioning whether they should invest additional time and money in making offers given the developments in recent days.
Sky News revealed on Monday that Ed Richardsthe former head of media regulator Ofcom, acts as a lobbyist for RedBird IMI.
Flint Global, the company Mr Richards co-founded, has been hired because of Mr Richards’ track record of involvement in public interest intervention notices (PIINs) – government investigations by the media and competition watchdogs which can lead to agreements being blocked.
In recent weeks, calls to block foreign majority ownership of the Telegraph have gained momentum as MPs and peers – mostly from the Conservative Party – have raised concerns about the Gulf’s funding of the papers.
A court hearing to wind up PIHL to offset a sale of The Daily Telegraph was adjourned on Monday after Barclays’ last-gasp bid to repay more than £1.1bn. to Lloyds Banking Group.
RedBird IMI said on Monday it would convert the £600m loan to the family for equity “on an early occasion”.
“Under the terms of this agreement, RedBird IMI has an option to convert the loan secured against the Telegraph and Spectator into equity and intends to exercise this option at an early opportunity,” it said.
“Any transfer of ownership will of course be subject to regulatory review and we will continue to cooperate fully with the government and the regulator.”
Barclays has made a number of increased offers in recent months to reject an auction and last month raised its proposal to £1bn.
Lloyds had repeatedly told the family and its advisers that they would either have to repay the debt in full or join the auction with other bidders.
Talks orchestrated by Goldman Sachs, the investment bank, have now begun with potential buyers, which also include London-listed media group National World.
Until June, the papers were headed by Aidan Barclay – the nephew of Sir Frederick Barclay, the octogenarian who, with his late twin Sir David, engineered the takeover of the Telegraph 19 years ago.
Lloyds had been locked in talks with Barclays for years over refinancing loans given to them by HBOS prior to the bank’s rescue during the 2008 banking crisis.
The family’s debt to Lloyds also includes some funding linked to Very Group, the Barclay-owned online shopping business.
The Telegraph and Spectator disposals are being overseen by a new group of directors led by Mike McTighe, the boardroom veteran who chairs Openreach and IG Group, the financial trading firm.
McTighe has been appointed chairman of Press Acquisitions and May Corporation, the respective parent companies of TMG and The Spectator (1828), which publishes the media titles.
In July, Telegraph Media Group (TMG) published full-year results that showed pre-tax profits had risen by a third to around £39m in 2022.
“RedBird IMI is fully committed to maintaining the existing editorial team of the Telegraph and Spectator publications and believes that editorial independence for these titles is essential to protect their reputation and credibility,” Monday’s statement read.
“We are excited about the opportunity to support the titles’ existing management to expand the reach of the titles in the UK, US and other English-speaking countries.”
Lloyds, RedBird IMI and a spokesman for Barclays declined to comment.