The Barclay Family has legal ownership of the Telegraph until the end of this year. The potential buyer supported by Abu Dhabi is waiting for the UK Government investigation results on the takeover of the paper.
After six months, the media group was no longer controlled by Lloyds Banking Group. The family paid off their loans with cash from RedBird IMI.
The family will have no control over the operation of the newspaper. An independent board will supervise the newspaper and sister magazine, the Spectator. Regulators will review a deal where RedBird IMI will acquire control of the group by exchanging debt for equity.
The Barclay family cleared their debts to Lloyds, which dated back decades. RedBird IMI provided about half of this amount in debt structured as a swap for control of Telegraph Media Group.
International Media Investments covered the remainder of the debt, which was backed by Manchester City owner, Sheikh Mansour bin Zayed Al Nahyan. This investment vehicle will be swapped into a new debt behind remaining Barclay business assets, such as The Very Group.
A spokesperson for Barclay Family said: “We’re pleased to have achieved this positive resolution, and we are grateful to Lloyds Banking Group, for their constructive involvement over the past months.”
Lloyds confirmed: “We are able to confirm that the repayment is now complete.” We always want to find a solution that is amicable with customers who have difficulty making their payments.
RedBird IMI already has the option of completing the debt-for-equity swap. However, the takeover won’t be completed until the regulators approve the deal.
Redbird IMI – which is led by former CNN President Jeff Zucker, but majority owned by Abu Dhabi Fund – has already pledged to maintain the Telegraph’s editorial independence once it takes control.
Lucy Frazer, UK Culture Secretary has issued a Public Interest Intervention Notice that asks Ofcom to scrutinise the proposed takeover by RedBird IMI of Telegraph Media Group.
RedBird IMI has received requests for information from Ofcom. It has until the 31st of January to complete its investigation.
Conservative politicians are worried that a group supported by a Middle Eastern Government could threaten press freedom. Lloyds considers the RedBird IMI Process deal as a significant victory, but there are concerns about national security. Blocking this deal may lead to a restart of the auctions for the titles.It recovered a large bad debt from the HBOS takeover during the 2008 financial crisis.
By striking a deal with the Barclay Family, the bank has doubled the expected proceeds. The bank was already in the process of launching an alternative auction that would have raised approximately £600mn.