A court hearing to liquidate a Barclay family holding companies in order to smooth a sale of The Daily Telegraph is poised to be adjourned after a last-gasp offer to repay more than £1bn to Lloyds Banking Group.
Sky News understands that a hearing scheduled to take place in the British Virgin Islands on Monday is expected to be postponed while the bank considers the Barclays’ latest effort to end the auction of the broadsheet newspapers.
An application to adjourn the hearing was submitted late on Friday.
Sources said this weekend that the Barclay family hoped to deliver a full repayment of its long-standing debt to Lloyds by the end of the month.
The adjourned court hearing would be expected to take place shortly after that date if the Barclays do not succeed in repaying the £1.16bn.
Initial offers for the Telegraph and Spectator are due on 28 November, with the billionaire hedge fund tycoon Sir Paul Marshall and Daily Mail proprietor Lord Rothermere among the bidders.
Sky News revealed on Friday that RedBird IMI, an investment vehicle run by Jeff Zucker, the former CNN chief, is backing the Barclay family’s £1bn-plus bid to regain control of The Daily Telegraph.
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RedBird IMI would lend approximately £600m to the family, with the balance of the debt being funded by a member of the Abu Dhabi royal family – said to be Sheikh Mansour bin Zayed Al Nahyan – the ultimate owner of a controlling stake in Manchester City Football Club.
If Lloyds is satisfied about the provenance and scale of the funding available to the Barclays, it would accept the debt repayment, thereby ending the auction process.
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Mr Zucker’s credibility means that his partnership with the Barclays therefore has the potential to radically alter the dynamics of the Telegraph’s journey to new ownership.
Mr Zucker is one of the world’s most prominent media executives, having served as president of CNN for nine years before his departure last year.
Nevertheless, rival bidders and Conservative MPs have begun to raise questions about the appropriateness of the Telegraph being financed largely by Middle Easter investors.
Image: Sir David Barclay (L) who died in 2021 and his twin brother Sir Frederick received knighthoods at Buckingham Palace in 2000
Neil O’Brien, the MP for Harborough, said on Friday: “The Telegraph and Spectator are two of our most prestigious publications.
“Naturally there’s interest from around the world in gaining control of them.
“I hope [the government] will scrutinise the financing and ownership structure of any deal closely and put them through the usual PIIN process.”
There have been repeated questions in recent weeks about whether bids for the influential and traditionally Conservative-supporting Telegraph newspapers financed by Gulf investors would trigger a government probe.
Danny Kruger, a backbench Conservative MP with links to another of the Telegraph bidders, the hedge fund tycoon Sir Paul Marshall, wrote to the culture secretary, Lucy Frazer, to urge her to issue a Public Interest Intervention Notice (PIIN) into the funding.
Lloyds, which forced the Telegraph and Spectator magazine’s holding companies into receivership more than five months ago, has been engaged in a long-running stand-off with the family over its borrowings.
The success of the Barclays’ offer to repay its debt in full to Lloyds will also rest on the outcome of RedBird IMI’s due diligence.
The Barclays have made a series of increased offers in recent months to head off an auction, raising its proposal last month to £1bn.
Lloyds, however, has repeatedly told the family and its advisers that they should either repay the debt in full or participate in the auction alongside other bidders.
Talks orchestrated by Goldman Sachs, the investment bank, have now kicked off with prospective buyers, who also include the London-listed media group National World.
The new board of the Telegraph holding company has established an incentive plan to keep key employees motivated during the sale process, with collective financial rewards totalling millions of pounds.
Until June, the newspapers were chaired by Aidan Barclay – the nephew of Sir Frederick Barclay, the octogenarian who along with his late twin Sir David engineered the takeover of the Telegraph 19 years ago.
Lloyds had been locked in talks with the Barclays for years about refinancing loans made to them by HBOS prior to that bank’s rescue during the 2008 banking crisis.
The family’s debt to Lloyds also includes some funding tied to Very Group, the Barclay-owned online shopping business.
Ken Costa, the veteran City banker who advised the Barclay brothers on their purchase of the Telegraph in 2004 and counts the sale of Harrods to Qatar Holding among his other flagship deals, is acting as a strategic adviser to the family.
The Telegraph and Spectator disposals are being overseen by a new crop of directors led by Mike McTighe, the boardroom veteran who chairs Openreach and IG Group, the financial trading firm.
Mr McTighe has been appointed chairman of Press Acquisitions and May Corporation, the respective parent companies of TMG and The Spectator (1828), which publish the media titles.
In July, Telegraph Media Group (TMG) published full-year results showing pre-tax profits had risen by a third to about £39m in 2022.
A successful digital subscriptions strategy and “continued strong cost management” were cited as reasons for the company’s earnings growth.
“Our vision is to reach more paying readers than at any other time in our history, and we are firmly on track to achieve our 1 million subscriptions target in 2023 ahead of our year-end target,” said Nick Hugh, TMG chief executive.
Lloyds and a spokesman for the Barclay family declined to comment on Saturday.
The CBI faces a deadline next September to refinance millions of pounds of funding put in place to avert its collapse during the autumn.
Sky News has learnt that a seven-figure facility put in place with banks will expire at the end of the third quarter next year.
While the size of the facility is unclear, sources have said it is likely to be several million pounds.
According to the business lobby group’s annual report and accounts, which was circulated to members late last week, it was able to survive the aftermath of a sexual misconduct scandal “through the backing of key members, the use of reserves, support from creditors and with bank financing”.
“The bank financing is due to terminate on 30 September 2024, after which it is the board’s current intention to look to renew the facility if required.
“The exceptional costs from the past year have now been paid and the organisation has been reshaped so that salary costs are appropriate given the expected level of income.”
On Friday, Sky News revealed that the CBI was urging members to swallow a further rise in fees even as it battles to regain its former standing among political and business leaders.
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Members will be asked at its annual meeting this week to approve a 5% rise in their subscription costs.
Self-styled as “the voice of British business”, the CBI has been slowly rebuilding its reputation, staging a slimmed-down version of its annual conference last month which featured an address by Jeremy Hunt, the chancellor.
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The group has been slashing costs by axeing a chunk of its workforce and closing most of its overseas offices following several rape allegations against former employees, which triggered an exodus of corporate members including Aviva and John Lewis Partnership.
Tony Danker, its director-general – who was accused of inappropriate behaviour but had nothing to do with the more serious allegations – stepped down in April weeks after being suspended.
The CBI briefly entertained autumn talks about a merger with Make UK, the manufacturers’ body, but these have now been curtailed.
An Abu Dhabi state-backed vehicle has moved closer to taking full control of The Daily Telegraph just hours after the launch of a regulatory probe that prevents it from removing key journalists from their posts.
Sky News has learnt that RedBird IMI has given the newspaper’s board and the government notice of its intention to activate a call option that will convert loans secured against the Telegraph titles and Spectator magazine into shares.
The move was communicated to key stakeholders late on Friday, and came as nearly £1.2bn was being transferred to an escrow account prior to its release to Lloyds Banking Group early next week.
A Whitehall source confirmed this weekend that the government had been notified about RedBird IMI’s move to exercise its option to take control of the shares.
A person close to the Abu Dhabi-based investor, which declined to comment formally, said it had already made it clear that it would seek to convert the loans “at an early opportunity”.
The activation of the call option does not mean the broadsheets fall under the immediate control of RedBird IMI, insiders pointed out on Saturday.
Lucy Frazer, the culture secretary, issued a Public Interest Intervention Notice (PIIN) on Thursday which has triggered an inquiry by Ofcom and the Competition and Markets Authority.
Pressure has been mounting in recent weeks from Conservative politicians for the takeover of the traditionally Tory-supporting Telegraph newspapers by a foreign state-backed entity to be probed under public interest and national security laws.
Sir Iain Duncan Smith and Lord Hague of Richmond, two former leaders of the party, have been among those who have called for scrutiny of the deal.
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RedBird IMI has insisted that it would preserve the newspapers’ editorial independence and offered to give the government a legally binding assurance of this intention.
RedBird IMI has also pledged not to complete the acquisition of the media assets until it has received government approval.
Image: Culture Secretary Lucy Frazer
On Friday, Ms Frazer confirmed a Sky News report that she would preserve the independence of the Telegraph during the investigations by making an Interim Enforcement Order preventing the Barclay family or RedBird IMI from interfering in their operation.
The notice of the intention to exercise the call option takes two of Britain’s most influential newspapers a stage closer to a change of ownership for the first time in nearly 20 years.
The Barclay family, which has owned the Telegraph since 2004, has been in dispute with Lloyds for years about the repayment of a £700m loan and hundreds of millions of pounds in interest.
Ms Frazer is seeking regulators’ responses before the end of January, after which the takeover of the broadsheet newspapers could be approved or blocked.
RedBird IMI is funded in large part by Sheikh Mansour bin Zayed Al Nahyan, the owner of Manchester City, has agreed that a trio of independent directors, led by the Openreach chairman Mike McTighe, will remain in place while the inquiries is carried out.
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RedBird IMI’s move to fund the loan redemption has circumvented an auction of the Telegraph titles which has drawn interest from a range of bidders.
The hedge fund billionaire and GB News shareholder Sir Paul Marshall had been agitating for the launch of a PIIN.
The Telegraph auction, which has also drawn interest from the Daily Mail proprietor Lord Rothermere and National World, a London-listed local newspaper publisher, is now effectively over.
Until June, the newspapers were chaired by Aidan Barclay – the nephew of Sir Frederick Barclay, the octogenarian who along with his late twin Sir David engineered the takeover of the Telegraph in 2004.
Lloyds had been locked in talks with the Barclays for years about refinancing loans made to them by HBOS prior to that bank’s rescue during the 2008 banking crisis.
The CBI is urging members to swallow a further rise in fees even as the lobby group battles to regain its former standing among political and business leaders.
Sky News understands that CBI members will be asked at its annual meeting next week to approve a 5% rise in their subscription costs.
It comes less than three months after the organisation – which styles itself as ‘the voice of British business’ – won a lifeline from banks which agreed to provide sufficient funding to avert collapse in the aftermath of a sexual misconduct scandal.
The CBI has been slowly rebuilding its reputation, staging a slimmed-down version of its annual conference last month which featured an address by Jeremy Hunt, the chancellor.
In a circular to members, it said the fee hike was in line with previous years.
However, the group has been slashing costs by axeing a chunk of its workforce and closing most of its overseas offices in an attempt to restore its finances to a more stable footing.
The crisis which erupted earlier this year, which followed several rape allegations against former employees, triggered an exodus of corporate members including Aviva and John Lewis Partnership.
Tony Danker, its director-general – who was accused of inappropriate behaviour but had nothing to do with the more serious allegations – stepped down in April weeks after being suspended.
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The CBI briefly entertained talks about a merger with Make UK, the manufacturers’ body, but these have now been curtailed.
The business group declined to comment on Friday, although an insider said it was “standard operating practice…to adjust prices for inflation”.