Wednesday, November 22, 2023

UK
Government ‘minded’ to intervene over Telegraph sale deal – Culture Secretary

ARAB OIL BARONS CAN OWN FOOTBALL TEAMS BUT NOT NEWSPAPERS

Henry Saker-Clark, PA Deputy Business Editor
Wed, 22 November 2023 

The Government is considering a public interest intervention into an agreement which could hand an Abu Dhabi-backed fund control of the Telegraph newspaper, the Culture Secretary has announced.

Lucy Frazer said in a written statement she was “minded to” issue a Public Interest Intervention Notice, which could lead to an investigation by regulators.

It comes after Abu Dhabi-backed fund RedBird IMI said on Monday that it was poised to take control of the Telegraph Media Group and fellow publisher The Spectator after striking a deal with previous owners the Barclay family to help repay outstanding debts.

Telegraph Media Group entered receivership around five months ago
 (Jonatha Brady/PA)

But a group of Conservative MPs called on ministers to use the UK’s national security laws to investigate the potential deal.

The Culture Secretary said the possible intervention related to “concerns I have that there may be public interest considerations” over the loan to the Barclays and subsequent agreement with RedBird IMI – a joint venture between US firm RedBird Capital and International Media Investments of Abu Dhabi.

Ms Frazer said she had contacted Lloyds, the Barclays and RedBird IMI to inform them over the potential notice and given the parties until 3pm on Thursday to respond to her concerns.

It the Government decides to issue the notice, media regulator Ofcom would then assess public interest concerns over the move.

Meanwhile, the UK’s competition regulator – the Competition and Markets Authority – would also look into competition worries.

In the summer, lenders at Lloyds placed the media titles into receivership and sought potential buyers to help cover over £1 billion owed by the Barclays to the bank.

But the bank paused the sale process on Tuesday until at least early December to consider the fresh agreement.

RedBird IMI, which is led by former CNN boss Jeff Zucker, said it would provide a loan of up to £600 million, secured against the publications, with IMI also providing a similar loan against other Barclay-linked assets.

The fund said the deal includes an option to turn the loans into equity which would hand it control of the newspaper and magazine. It said it planned to “exercise this option at an early opportunity”.

The Spectator magazine was being sold in a separate process (Alamy/PA)

US-based RedBird said it would take over “management and operational responsibility” in the deal.

Any deal would need to receive clearance from the bank’s own regulatory process, alongside political scrutiny.

A raft of potential suitors including hedge-fund millionaire and GB News investor Sir Paul Marshall, Daily Mail publisher DMGT, Yorkshire Post owner National World and German publisher Axel Springer had all been linked with a takeover move for the Telegraph.

Meanwhile, DMGT and Rupert Murdoch’s News UK were both reportedly interested in a move for The Spectator.

Culture Secretary minded to intervene in Abu Dhabi’s Telegraph takeover

Christopher Williams
TELEGRAPH
Wed, 22 November 2023 

Ms Frazer has given the parties until 3pm on Thursday to respond to her concerns - Anadolu Agency

The Culture Secretary has told Lloyds Banking Group that she is minded to intervene to safeguard press freedom as it seeks to complete a £1.2bn debt repayment deal that would hand control of The Telegraph to a fund backed by Abu Dhabi.

Lucy Frazer has written to Lloyds, the Barclay family and RedBird IMI signalling that she will issue a Public Interest Intervention Notice (PIIN) that would prompt regulators to investigate. She asked for more information about the complex arrangements and gave the parties until 3pm on Thursday to respond to her concerns.

The Barclay family are attempting to repay £1.2bn in overdue loans to Lloyds with new lending mostly sourced from Abu Dhabi royalty. RedBird IMI, a media investment fund, would be the vehicle for £600m of the total and would seek to immediately convert its loan into ownership of The Telegraph.

The Barclay family lost control of The Telegraph and The Spectator magazine in June. It has agreed new loans backed by Manchester City owner and UAE vice-president Sheikh Mansour bin Zayed Al-Nahyan. Redbird IMI is mostly funded by him and his business in Abu Dhabi would provide the balance of the debt directly to the Barclay family.

Sir Iain Duncan Smith, the former Conservative Party leader, said: “Of number one importance is editorial independence of The Telegraph, which is absolutely critical. It is one of our oldest newspapers and a significant newspaper of record. Many will be concerned at the thought that it could be handed over to a foreign government.”

Ms Frazer has said she is minded to intervene in the deal despite allegations of threats by Lloyds.

The bank’s chief corporate affairs officer Andrew Walton warned officials in the Department for Digital, Culture, Media and Sport (DCMS) that using powers to protect the public interest in free expression risked angering Lloyds’s powerful shareholders.

Sources close to the discussions on Monday said the comments were interpreted as a threat, an interpretation Mr Walton rejected.

He said: “We made abundantly clear to the Government the significant implications to us and to our shareholders of a PIIN at this stage. It was not a threat but it was a very clear warning.”

Lloyds is lobbying hard for the PIIN to address only the conversion of the RedBird IMI loan into shares and not the overall debt repayment plan.

The bank fears that a broad investigation would mean the funds are not delivered to the Barclay family in time for a court hearing in the British Virgin Islands on December 4.

If the December 4 hearing goes ahead, a crucial entity in the chain of ownership would be liquidated and there would be no prospect of a full repayment of the £1.2bn debt.

In that scenario, Lloyds would be forced to restart an auction that was paused on Tuesday after its dealings with the Barclay family angered bidders including a consortium led by Sir Paul Marshall, the publisher of The Daily Mail and National World, a local newspaper group.

Mr Walton and his colleagues are instead lobbying for the debt repayment to be allowed to go through. They want Ms Frazer to trigger an investigation only into the second stage of the plan, the conversion of RedBird IMI’s loan into shares in The Telegraph. The fund has said it would cooperate with such a probe and that it would protect The Telegraph’s independence.

The conversion of the RedBird IMI loan into Telegraph ownership is planned for as soon as possible after the debt is repaid. An investigation of this stage alone could leave The Telegraph in regulatory limbo for several months, technically owned by the Barclay family but with rules in place to prevent them making changes to its operations.

If RedBird IMI’s Abu Dhabi links ultimately prompt Ms Frazer to block a takeover, there would be further uncertainty over ownership.

No comments:

Post a Comment