Telegraph to Escape Debts as RedBird IMI Paves Way for Sale

RedBird IMI has clarified that The Telegraph newspaper will not be held liable for the significant debts still owed by its former owners, the Barclay family. The statement, released on Tuesday evening, aims to dispel concerns among potential buyers and regulators that the historic broadsheet would inherit unsustainable liabilities following an onward sale.

The United Arab Emirates-backed joint venture stated it expects all liabilities tied to The Telegraph to be extinguished and discharged once an onward sale is agreed. The newspaper, previously used as collateral by the Barclays for a large loan, was at risk of being saddled with a so-called poison pill debt arrangement valued at £500 million, should the family fail to repay their borrowings.

According to RedBird IMI, the current arrangement sees The Telegraph providing security for loans owed to both Lloyds Banking Group and to RedBird IMI by the Barclay family. However, upon any sale, all such securities and guarantees will be removed, ensuring The Telegraph and its subsidiaries carry no residual liabilities. This latest assurance is targeted at facilitating a smooth transaction and ending a period of strategic uncertainty surrounding the ownership of the title.

Documents indicate that the Department for Culture, Media and Sport had earlier approved the arrangement linking The Telegraph to the Barclays’ debt. Ministerial letters from last year show that then Culture Secretary Lucy Frazer granted permission for the liabilities to be transferred to a new holding company under a hive-down restructuring deal, after RedBird IMI requested this structure as it sought control of the paper. It was understood that, in the event of the UAE-backed takeover failing, The Telegraph could have been responsible for the outstanding loan.

Ultimately, the government blocked the RedBird IMI acquisition on grounds of press freedom. This left the sale process mired in political and financial complexity, with RedBird Capital Partners having withdrawn a separate bid last week, citing a lack of transparency in regulatory approvals. Gerry Cardinale, managing partner at RedBird Capital, noted the transaction had become too politicised and indicated the firm is still interested in playing a role in a future auction.

Recent valuations place The Telegraph at approximately £350 million, creating fears that any shortfall from the original £500 million loan agreement might leave the newspaper with a residual debt. RedBird IMI’s public guarantee now appears to remove this risk, clarifying that no debt will remain with The Telegraph even if the final sale value falls below the Barclays’ original obligations.

Political calls have intensified for an independent authority to oversee the forthcoming sale, rather than leaving the process with the Department for Culture, Media and Sport. Lord Fox, a vocal critic of foreign ownership of British newspapers, has urged ownership of the process be handed to either the Cabinet Office or an entirely independent body, arguing that ministerial intervention to date has worsened the situation and prolonged uncertainty for the paper’s staff and stakeholders.

The current board of The Telegraph, including chairman Mike McTighe, Stephen Welch, and Boudewijn Wentink, had previously endorsed the original loan structure without foreseeing the potential disruption to any future transaction. A similar financing arrangement was also previously in place with Lloyds. Amid recurrent speculation, RedBird IMI maintains that a clean sale remains its objective and that it is working actively to secure long-term ownership for one of the UK’s best-known media brands.