RedBird IMI, Jeff Zucker’s company, offers to buy Telegraph for debt in exchange for equity.

RedBird IMI, backed by Abu Dhabi, has offered to buy the Telegraph and Spectator as part of a deal that will repay the debt owed to Lloyds Banking Group by the Barclay Family.

RedBird IMI – the investment group headed by Jeff Zucker, former CNN chief – announced on Monday that it would provide funding to Barclay Family to “repay the £1.1bn in full” of Lloyds loans and “bring Telegraphand Spectator from receivership”. The UK lender took over the UK newspaper group in summer.

International Media Investments (IMI), the investment vehicle of Manchester City owner Sheikh Mansour Bin Zayed Al Nahyan would be responsible for about half the debt financing.

RedBird IMI stated that if the deal went through, they would exercise the option to convert the debt into ownership in the newspaper group “at the earliest opportunity”. RedBird IMI is performing due diligence in order to ensure that the assets are sufficiently secure for the company to provide financing.

If Lloyds accepts the proposal, it will be the end of Barclay’s 20-year ownership of national newspapers.

On Monday, the lender asked a British Virgin Islands court to postpone until early December an hearing that would have allowed the liquidation of the last Barclay holding company. The lender is still pursuing a separate process for selling the Telegraph and sister publication, the Spectator.

In the proposed deal Sheikh Mansour’s IMI will be left with significant debt in the last major assets owned by the Barclay Family. According to sources familiar with the talks, this includes the Very Retail and Financial Services group.

The deal is structured as a PS600mn secured loan from RedBird IMI against the Telegraph, and Spectator. International Media Investments is providing a loan in a similar amount, secured by other Barclay commercial and family interests.

People familiar with the discussions said that this would equalize the difference between £1.1bn, the amount offered to pay off the Lloyds debt, and the £600mn equity worth of the Telegraph Group. Only the £600mn borrowed against the Telegraph would be converted to equity.

Conservative MPs urged Ministers to investigate the deal using the National Security Act, given their concerns about Abu Dhabi’s influence over an editorial team of a newspaper which is close to Conservative interests.

RedBird assured that the Telegraph would be editorially independent in order to avoid regulatory investigation. RedBird Capital, based in the US, “will take sole responsibility for management and operations of the titles under Jeff Zucker’s leadership”, the company said. “International Media Investments is a passive investor.”

RedBird IMI said it was committed to maintaining existing editorial teams of the Telegraph and Spectator titles and wanted to extend the reach of these titles “in the UK and US and other English speaking countries”.

According to a memo that editor Chris Evans sent on Monday, Telegraph journalists expressed concerns over editorial independence. Evans wrote: “At this moment, I don’t know more than what you have already read.”

People who were close to the discussions said that Lloyds had to do its own due diligence on financial crime and sources of funding before accepting the proposal.

A person familiar with the bank’s stance said that it wanted to ensure the deal was viable, before exclusively negotiating with the Barclay Family. Lloyds has rejected lower offers in the past.

The person said that once the UK lender is repaid it will not be involved in any future transactions, such as a swap of debt for equity with RedBird.

The latest move, however, has angered a few bidders due to the months of effort and cost involved in putting together bids for the group of newspapers. Paul Marshall, the hedge-fund billionaire, as well as media groups News UK, and DMGT, have all expressed an interest.

One person who was close to the bidders claimed that the Barclay family tried to “hand over two precious media assets without regulatory oversight to an autocratic Government”, adding “This is a theft taking place in broad daylight.”

A person who was directly involved in the transaction said that the claim that assets would be handed over to an autocratic government is false, as RedBird founder Gerry Cardinale, and Zucker, who are both Americans and based in the US, will have complete control over the asset. This person said that their media reputations should be enough to reassure the public that the Telegraph will continue to thrive.