Jeff Zucker’s RedBird IMI offers to take over Telegraph in debt for equity deal


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Abu Dhabi-backed RedBird IMI has offered to take control of the Telegraph and Spectator under a deal to repay the debt owed by the Barclay family to Lloyds Banking Group.

RedBird IMI, the investment group run by former CNN boss Jeff Zucker, on Monday said it had agreed to provide funding to the Barclay family to repay the £1.1bn of loans “in full” to Lloyds and “bring the Telegraph and Spectator out of receivership”. The UK lender seized the UK newspaper group last summer.

International Media Investments, the investment vehicle backed by Manchester City owner Sheikh Mansour bin Zayed Al Nahyan, would also be involved in about half of the deal’s debt financing.

RedBird IMI said if the deal were to go ahead, it intended to exercise an option to convert debt into ownership of the newspaper group at “an early opportunity”. RedBird is conducting due diligence to check there is sufficient security on the underlying assets for them to provide the financing, one of the people involved said.

If Lloyds agrees to the proposal, the deal will mark the end of the Barclay family’s ownership of the national newspapers after two decades.

The lender on Monday asked a court in the British Virgin Islands to adjourn until early December a hearing that could have liquidated the last of the Barclay family’s holding companies. It is still proceeding with a separate auction process to sell the Telegraph as well as sister publication the Spectator magazine.

As part of the proposed deal, Sheikh Mansour’s IMI would be left with a significant debt holding in the last remaining major business assets held by the Barclay family. This includes the Very retail and financial services group, according to people familiar with the discussions.

The deal will be structured as a £600mn loan secured against the Telegraph and Spectator from RedBird IMI. International Media Investments will provide a separate loan of a similar amount secured against other Barclay family businesses and commercial interests.

This would balance out the difference between the £1.1bn offered to repay the Lloyds debt in full, and the £600mn equity value of the Telegraph group, said people familiar with the talks. It is only the £600mn loan against the Telegraph that would be converted into equity.

Conservative MPs have urged ministers to use the national security act to investigate the deal given their fears of influence by Abu Dhabi over the editorial team at a newspaper that is traditionally close to the party’s interests.

RedBird has offered assurances that the Telegraph will be editorially independent to avoid regulatory investigations. US-based RedBird Capital “alone will take over management and operational responsibility for the titles under the leadership of RedBird IMI chief executive Jeff Zucker”, it said, adding: “International Media Investments will be a passive investor only.”

It said RedBird IMI was committed to maintaining the existing editorial team of the Telegraph and Spectator publications, and wanted to expand the reach of the titles “in the UK, the US and other English-speaking countries”.

Telegraph journalists have raised concerns about editorial independence, according to a memo sent to staff by editor Chris Evans on Monday. “At the moment I know no more than you will have read,” Evans wrote.

People close to the talks said that Lloyds needed to carry out its own checks on sources of funding and financial crime due diligence before agreeing to the proposal.

One person with knowledge of the bank’s position said it wanted to make sure the deal was viable before negotiating exclusively with the Barclay family. Previous, but lower, offers have been rebuffed by Lloyds.

Once repaid, the UK lender will have no role in any subsequent transactions such as a debt-for-equity swap with RedBird, the person added.

However, the latest move has angered some bidders given months of work and the cost of pulling together bids for the newspaper group. Those who have registered an interest include Paul Marshall, the hedge fund billionaire, and media groups News UK and DMGT.

A person close to one of the bidders said the Barclay family was trying to “hand two treasured media assets to an autocratic government without regulatory scrutiny”, adding: “This is a heist taking place in full daylight.”

Another person directly involved in the deal said the accusation that the assets were being handed to an autocratic regime was false given that RedBird’s founder Gerry Cardinale and Zucker, both American and US-based, would have total control of the asset. Their reputations in media should reassure people that the Telegraph would continue to flourish, this person added.



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