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Lloyds Banking Group is weighing an offer by the Barclay family to repay all the £1.1bn in debt behind the Telegraph Media group in a move backed by RedBird IMI, the media and sports investment group run by former CNN boss Jeff Zucker.
RedBird, which is in part funded by the Abu Dhabi-based International Media Investments group, has offered to help finance a deal alongside the Abu Dhabi royal family, according to two people close to the talks.
Success would halt the auction for the national newspaper and its stablemate magazine The Spectator, which have been owned by the Barclay family for the past 20 years.
People close to the talks said any deal would depend on due diligence being completed by RedBird and the Abu Dhabi-based investor, however. The bank would also need to be sure about the reliability of the funding before proceeding with any transaction, they added.
The Barclay family has made multiple offers to pay down the debt since losing control of the newspaper group to Lloyds this year, but they have all been rebuffed given the bank’s demands for full repayment.
One person briefed on the talks said Lloyds was “assessing the latest proposal carefully”, with Redbird a more “credible name” to have behind the family’s bid.
Asked this month whether he was interested in buying the Telegraph, Zucker told the Financial Times he would not “talk about that”.
A spokesperson for Zucker declined to comment. Lloyds and the Barclay family declined to comment.
Any deal would leave questions over why the family have been so keen to pay off the £1.1bn debt in full rather than participate in an auction where the cost of the newspaper is likely to be about half that amount.
One person familiar with the negotiations queried how the Telegraph business could be run with that level of debt behind it, but also acknowledged that the family’s “trump card is that they are entitled before anyone else to repay their debt”, and that Lloyds “cannot legally stop them from doing that”.
He added that, if agreed, the deal would be a major win for the bank given the debt had already been written down significantly in its accounts.
The RedBird-backed offer, which was first reported by Sky, comes ahead of a crunch court decision on Monday over whether to liquidate the holding company that holds the debt in the British Virgin Islands.
The auction will continue until a deal is reached, according to people close to the process. However, other interested bidders for the Telegraph will be alarmed at the latest approach, given they have spent months preparing offers.
They will argue that the deal will need to be scrutinised by the government due to the potential change of control to a group with links to the Middle East, although the family have in the past rejected this argument saying they will ultimately continue to own the group.
A person familiar with the structure of the loans said “a debtor [can] pay their debts in full in their own name, so long as money is there and not criminal”.
Other bidders, including hedge fund billionaire Paul Marshall and rival media groups DMGT and News UK, have been asked to submit their first round offers before the end of the month.
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