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Dealwatch: Telegraph auction off as Barclay brothers pay off Lloyds debt with loan

The Telegraph and The Spectator are no longer up for auction after Abu Dhabi-backed RedBird IMI helped the Barclay family repay its £1.2bn debt to Lloyds Banking Group.

Lloyds placed Telegraph Media Group’s Bermuda-based holding company B.UK into receivership over the unpaid debt in May. AlixPartners was appointed as receiver and Aidan and Howard Barclay were removed as directors of TMG and The Spectator.

Advisers Goldman Sachs opened an auction process for TMG on Friday 20 October. The auction was paused on 20 November to give Lloyds time to secure a debt repayment plan, with a scheduled winding-up hearing in the British Virgin Islands on Monday 4 December the effective repayment deadline.

The debt was paid off by RedBird IMI, a joint venture between US private equity firm RedBird and Abu Dhabi-based company IMI, and the hearing did not go ahead.

Lloyds acquired the loans when it took over failing Bank of Scotland holding company HBOS in 2008. Now repaid, Lloyds can wash its hands of its involvement.

But the TMG ownership saga rumbles on. UAE vice president and Abu Dhabi royal Sheikh Mansour bin Zayed Al Nahyan is a major investor in RedBird IMI. Abu Dhabi’s involvement in the TMG purchase bid raised concerns among a number of MPs. In late November, a group of 18 MPs including former Conservative Party leader Iain Duncan Smith and foreign affairs committee chair Alicia Kearns wrote to deputy prime minister Oliver Dowden arguing that the deal raises a ‘very real potential national security threat’.

In response, culture, media and sport secretary Lucy Frazer on 30 November issued a public interest intervention notice requiring the CMA to report on jurisdictional and competition matters and Ofcom to report on media public interest considerations – ‘namely’, said Frazer in parliament, ‘the need for accurate presentation of news and free expression of opinion in newspapers’. Both entities must report back to Frazer by 26 January 2024.

In the meantime, a hold-separate order prevents any change in ownership. The Barclays have nominally regained control of the Telegraph and the The Spectator. But the independent board of directors appointed when Lloyds placed B.UK into receivership remains in position.

Few expect the CMA or Ofcom to block the deal entirely. Frazer’s language indicates that she was motivated by freedom of speech concerns related to Abu Dhabi’s involvement in the deal. But some lawyers argue that some form of regulatory investigation would likely have been triggered regardless of who purchased TMG, given the high profile of the Telegraph as an asset.

Legal Business understands that the following firms were involved in the transaction.

Weil advised the Barclay family with a team led by London private equity partner Marco Compagnoni. Meanwhile, London restructuring and insolvency partner James Maltby led the Hogan Lovells team that advised Lloyds.

RedBird IMI was advised by a Gibson Dunn team across New York, London, and Abu Dhabi. Freshfields was advising the receivers, and corporate partners Dan Schuster-Woldan and Lisa Chang are leading a cross-practice team from Linklaters advising the Telegraph and The Spectator in the sale.

In addition, Goodwin also confirmed that it was acting for the independent directors who took control of the business following enforcement by the lender, with a team led by London restructuring partner Geoff O’Dea.

Closing of RedBird IMI’s acquisition of TMG is subject to the regulatory investigations, due to report on 26 January.