Telegraph Media Group seen as a ‘distressed asset’, ex-director says

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Prospective buyers of the Telegraph Media Group regard the UK newspaper publisher as a “distressed asset” and it is “not going to be an easy asset to sell”, a court has been told.

Howard Barclay, a senior member of the family that recently lost control of the media group after it was forced into receivership over £1bn of debts, was testifying during a courtroom fight over money between family elder Sir Frederick and his ex-wife Lady Hiroko following their divorce.

Lady Hiroko secured a £100mn divorce settlement two years ago, but as of this week Sir Frederick, 88, was yet to provide the funds.

An adviser to Sir Frederick, Martin Clarke, told the court on Friday that the retired businessman was trying to do so but was finding it “very difficult” because of a lack of funds. Sir Frederick was being lent money from his daughter Amanda, who in turn was borrowing from an undisclosed source, Clarke said.

During several hearings this week the judge in the case, Sir Jonathan Cohen, expressed frustration with the length of time the mooted transfer was taking. “This has been going on for months and months and months,” he said on Friday. He said he had been assured on “countless occasions” before that a settlement was close.

Howard Barclay was testifying in part because his uncle’s lawyers had previously told the court that his assets could not be accessed without the help of Howard and his brother Aidan, both sons of Sir Frederick’s late twin brother, David.

His testimony on Friday offered another glimpse into the labyrinthine corporate structures behind the family’s interests in businesses including online retail group Very.

Sir Jonathan said that the financial arrangements had left Sir Frederick “high and dry”. Howard Barclay said that he was “trying to help”, but pointed to difficulties the family businesses had encountered, including rising interest rates.

Lloyds Banking Group last month seized control of Telegraph Media Group, which owns the daily and Sunday newspapers and the Spectator magazine, and appointed AlixPartners as receiver.

Howard Barclay told the court that the family was “unlikely” to recover any of the proceeds from the sale. “Most buyers . . . look at it as a distressed asset”, he said. “It’s not going to be an easy asset to sell.”

Lloyds wants to choose a new chair to oversee the sale before formally putting the business on the block. Banks including JPMorgan and Goldman Sachs have been in talks over the mandate, according to people familiar with the matter.

Lloyds is expected to announce further details of the sale after financial results for Telegraph Media Group are published this month. The results would show that the media group was performing well, the people said, giving potential bidders the latest information on which to base offers.

Those close to the process said that while the debt could be described as distressed, the actual business itself was faring well.

The sale is expected to attract interest from a range of would-be investors, from international media groups to wealthy private investors such as Paul Marshall.

A spokesman for the Barclay family was not immediately available for comment.