Lloyds rebuffs Barclay family’s latest £1bn attempt to regain Telegraph

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Lloyds Banking Group has rebuffed the latest £1bn attempt by the Barclay family to reclaim the Telegraph, attempting to reassure unsettled bidders in an auction for the British newspaper group.

Bidders for the centre-right broadsheet have been concerned by repeated offers by the Barclay family to take back control of The Telegraph and The Spectator by paying down much of the £1.1bn debt owed to Lloyds.

The bank, which placed the Telegraph into receivership in June, rejected a £1bn offer initially made by the family and backed by Middle Eastern investors as recently as three weeks ago, according to two people familiar with the situation.

Lloyds told the Barclays to either repay the £1.1bn with a transparently funded offer, or bid in an ongoing auction, those people said. The bank has contacted bidders to reassure them of progress in the auction, which aims to be completed by early next year, they added.

Analysts do not expect the sale price for the Telegraph to exceed £600mn based on market comparisons. 

The move by Lloyds comes as a court hearing last week in the British Virgin Islands postponed the appointment of liquidators for a holding company that sits above the newspaper group and the debt. The court heard that the Barclay family had made a £1bn offer backed by a member of the Emirati royal family.

The court said that the family had an extra month to resolve the ownership of the newspaper with the bank before a judgment would decide the fate of the holding company.

Lloyds considers that there has not been sufficient proof of funds so far from the family, despite a letter to the bank suggesting that the offer was backed by the First Abu Dhabi Bank, according to the two people familiar with the bid. There are also concerns over whether a bid backed by Abu Dhabi would need to be scrutinised for approval by the secretary of state through a Public Interest Intervention Notice (PIIN).

A person close to the family said that the letter from the Abu Dhabi bank over funding should be sufficient to show that the offer was real.

The Barclay family will still try to negotiate a deal to buy back the debt before the end of the month, according to people familiar with their position. 

A spokesperson for the family said that the proposals concern “the settlement of outstanding loans . . . there is no precedent and no basis for a PIIN being issued in relation to a debt transaction, and we are highly confident [this] would not trigger any regulatory reviews regarding the ownership of the media assets”. 

Lloyds declined to comment.

The auction is proceeding as planned, with first-round bids expected over the next few weeks, and a conclusion of the process scheduled for the first quarter of 2024, according to people familiar with the situation. As well as any additional scrutiny triggered by a PIIN, any deal will probably attract investigations by the regulator, Ofcom, and the Competition and Markets Authority. 

Analysts at Enders say most bidders would be subject to public interest scrutiny, and in particular if using Middle Eastern cash. Lord Rothermere’s DMGT is set to take a minority investment from investors in Qatar of about 20 per cent to boost its firepower in the auction for the Telegraph, while other bidders are also sounding out funders from Saudi Arabia and other parts of the region. DMGT sees the opportunity to grow digital subscription and expand the brand in the US market.

Nadhim Zahawi confirmed in a Times Radio interview on Wednesday that he has tried to help the Barclay family as a “friend”, including introducing them to potential investors from the UAE “and other parts of the world”. Zahawi, the Conservative MP and former minister, denied acting as a broker in any deal, and insisted this was a matter for the family and Lloyds. He added that it would be “an honour” to be appointed chairman of the newspaper group.

Other bidders for the newspaper include a consortium fronted by Sir William Lewis and UK-listed National World. Rupert Murdoch’s News UK has also registered interest, but it is expected to focus on attempting to acquire The Spectator magazine, according to those close to the process.

Bidders were this week asked to sign non-disclosure agreements before accessing the data room to examine the financial position of the newspapers.

Paul Marshall, the Brexit-supporting hedge fund founder who has agreed funding from US financier Ken Griffin, also wants to grow the newspaper in the US, where his management team sees a gap in the market for a mainstream centre-right audience.

Some bidders have also attempted to approach Lloyds about a potential deal involving the debt behind the paper, including Marshall, but have been told that the bank only wanted to sell through the auction. Any deal over the debt would also need the dissolution of the British Virgin Islands holding company.