Daily Telegraph inches closer to sale after bank seizes control of parent firm

The Daily Telegraph newspaper has inched closer to a sale after Lloyds Banking Group seized control of its parent firm over unpaid loans and placed it in the hands of receivers.

Sky News has previously reported how the bank was understood to have undertaken the drastic move and was in the process of appointing investment banks to handle an auction of the press pack.

It is understood to value the Telegraph, its sister Sunday paper and The Spectator magazine at £600m.

They are contained within the profitable Press Acquisitions division of B.UK Ltd, which is controlled by the Barclay family.

The division also includes the Telegraph Media Group.

Lloyds appointed AlixPartners to act as receiver over B.UK after years of talks about refinancing a family business loan dating back before the financial crisis of 2008 came to nothing.

AlixParters said of the current position: “Bank of Scotland [part of Lloyds] has made this appointment under its rights as a lender, to consider alternative strategies to repay a facility… that remains in default despite extensive discussions to resolve the situation.”

The statement added that the process ahead “may involve sales of the Telegraph and Spectator businesses”.

It concluded: “The receivership over the shares in B.UK is in no way related to the financial health or performance of the Telegraph or Spectator businesses and we do not anticipate any operational changes to the businesses or their employees.

“Neither the Telegraph Media Group nor the Spectator are entering administration.

“In the meantime, the day-to-day running of all operating subsidiaries held by B.UK Limited will continue as normal.”

The Barclays have maintained ownership of the newspapers since 2004.

The expected sale, while not guaranteed, would attract high levels of interest given its subscriber base and profitability.

Sky’s City editor Mark Kleinman expected a bidding frenzy for the titles.

“It’s not often that we get national newspapers of the calibre of the Telegraph titles coming onto the market,” he said.

“I would expect a pretty hot bidding war to take place over the next few months.”

Of the potential bidders, he said: “I think we will get some interest from Lord Rothermere, the owner of the Daily Mail.

“We’ll almost certainly hear speculation that Rupert Murdoch, the owner of course of The Times and The Sun, may want to throw his hat into the ring.”

Given the papers’ political affiliations, he also expected some Conservative party donors to express interest in the auction.

The competition regulator would be expected to take a keen interest should it feel that the successful bidder already has enough of a share of the market.

Bank of Scotland said of its actions: “Due to debts being in default and with no sign they would be repaid, Bank of Scotland was regrettably left with no other choice but to appoint receivers over B.UK. Limited.

“The Receivers subsequently initiated changes to the directors of certain B.UK subsidiaries, with independent directors appointed to Ellerman Investments Ltd, Telegraph Media Group Limited and Spectator (1828) Limited.

“The decision to appoint receivers is an act of last resort and follows numerous discussions with B.UK’s parent company, Penultimate Investment Holdings Limited (PIHL).

“The aim of these discussions, which were held over a long period and undertaken in good faith, had been to find a consensual solution and repayment of PIHL’s borrowing to Bank of Scotland.

“Unfortunately, no agreement could be reached, which prompted the appointment of Receivers. While the Receivers are now in place, the Bank remains willing to continue discussions to find a suitable solution.”

A spokesperson for Barclays said: “We can confirm that discussions with Lloyds Banking Group remain ongoing.

“We hope to come to an agreement that will satisfy all parties. As AlixPartners made clear, this situation is in no way related to the financial health or performance of the Telegraph or Spectator businesses”.