The Barclay family has regained temporary ownership of the Telegraph newspaper as the prospective Abu Dhabi-backed owner awaits the U.K. government’s probe results regarding its takeover. Following six months under the control of its lender, Lloyds Banking Group, the media group emerged from financial receivership. The family settled its outstanding debts using funds provided by RedBird IMI.
However, during this interim period of ownership, an independent board will oversee the operations of the newspaper and its sister magazine, the Spectator. This arrangement is in place while regulatory authorities evaluate the proposed transfer of control to RedBird IMI through a debt-for-equity swap.
On Monday, the Barclay family settled their long-standing debts with Lloyds, paying GBP 1.2 billion (USD 1.5 billion). RedBird IMI provided approximately half of this sum through structured debt aimed at acquiring control of the Telegraph Media Group.
The outstanding debt was covered by International Media Investments, an investment entity supported by Sheikh Mansour bin Zayed Al Nahyan, owner of Manchester City. This remaining debt will be converted into new debt associated with the Barclay family’s other business assets, such as the Very Group.
A spokesperson representing the Barclay family expressed satisfaction, stating, “We are pleased to have reached this positive resolution and are grateful to Lloyds Banking Group for their constructive engagement over recent months.”
Confirming the repayment, Lloyds stated, “We can confirm the repayment of the PIHL facilities has now completed. We are always keen to work constructively with customers who get into difficulty with their repayments to reach an amicable solution.”
Although RedBird IMI has exercised its option for the debt-for-equity swap, the finalization of the takeover depends on regulatory clearance. RedBird IMI, led by former CNN president Jeff Zucker and majority-owned by an Abu Dhabi fund, has pledged to uphold the Telegraph’s editorial independence.
The U.K.’s Culture Secretary, Lucy Frazer, has raised concerns by issuing a public interest intervention notice, tasking Ofcom with scrutinizing the proposed takeover for potential implications. Ofcom has until the end of January to conduct its investigation and has already sought requests for information from RedBird IMI.
The deal has faced criticism from Conservative politicians, highlighting worries about press freedom and potential national security issues with a Middle Eastern government-backed majority ownership.
The situation represents a significant win for Lloyds Banking Group, enabling them to recover one of their largest bad debts. The bank had initiated an auction process expected to raise around GBP 600 million (USD 757 million), but by striking a deal with the Barclay family, they have doubled the anticipated proceeds.
Ultimately, the fate of the RedBird IMI takeover remains uncertain pending regulatory decisions. If blocked, the auction for the titles may restart, signifying a complex and pivotal moment for the Telegraph and its potential stakeholders. Regardless, the deal marks a major success for Lloyds. It allowed the bank to recover one of its most substantial bad debts that had remained on its balance sheet since the acquisition of HBOS during the 2008 financial crisis.
Banque Pictet Settles USD 123m U.S. Tax Evasion Case
Swiss bank Banque Pictet admitted aiding US taxpayers in hiding USD 5.6B from IRS, agreeing to a USD122.9M settlement. The deal includes corrective measures and potential charge dismissal upon three years of compliance.
Qatar Cuts Barclays Stake Amid Bank’s Overhaul
Qatar’s sovereign wealth fund, Qatar Holding, reduces Barclays’ stake from 5.3% to 2.9% through a USD 644 million share sale. The move coincides with pressure on Barclays’ CEO to unveil a cost-cutting strategy.
Ex-Freshfields Partner Faces Tax Fraud Conviction
Frankfurt court indicates Ulf Johannemann, former global tax head at Freshfields, is likely to be convicted for aiding tax fraud in advising Maple Bank. Charges stem from fraudulent share-swapping schemes.