The Daily Telegraph - Saturday
Abu Dhabi-backed Telegraph bidder rejects plan to reduce stake
THE prospective owners of The have rejected a plan to reduce the share of Abu Dhabi cash behind the takeover and ease concerns over press freedom.
Jeff Zucker, the former CNN chief leading RedBird IMI, has ruled out restructuring or bringing in new investors to appease regulators, insiders said.
Some 75pc of the $1bn (£790m) fund is provided by International Media Investments (IMI), an Abu Dhabi vehicle controlled by Sheikh Mansour bin Zayed al-Nahyan, the Manchester City owner and vice-president of the United Arab Emirates. The rest is derived from
RedBird, a US private equity firm with institutional and family office backing.
It is understood The Telegraph’s independent directors proposed that reducing IMI’s interest to a minority, or even 25pc of The Telegraph’s £600m price, would help them win a crucial recommendation from Ofcom to Lucy Frazer, the Culture Secretary. However, multiple sources confirmed that Mr Zucker firmly rejected the idea.
Bidders in an auction that has since been abandoned had been warned that any more than 25pc funding from the Gulf would not be acceptable to the Government. RedBird IMI’s subsequent ambush via a complex debt transaction that would leave The Telegraph three-quarters backed by Abu Dhabi prompted legal questions, which are being examined by rivals and officials.
An Ofcom team is investigating the impact of the proposed RedBird IMI takeover on the public interest in free expression and the accurate presentation of news.
It is due to deliver a report to Ms Frazer by Jan 26. She will then decide whether to allow the takeover to go ahead, negotiate remedies to protect press freedom with RedBird IMI, or refer the controversy to the Competition and Markets Authority for deeper scrutiny. RedBird IMI has been exploring ideas such as an editorial board in hope such “behavioural” remedies may satisfy Ofcom. However, regulators tend to prefer “structural” remedies such as the dilution proposed by The
Telegraph’s independent directors, as they are viewed as more robust and do not require ongoing monitoring.
The Telegraph’s independent directors, led by chairman Mike McTighe, were put in place by Lloyds Banking Group when it seized control in June by appointing receivers.
After the Barclay family repaid an overdue £1.2bn debt on Monday using cash borrowed from RedBird IMI and directly from IMI, the receivership ended and the bank withdrew. However, the directors were kept in place by a legal order issued by Ms Frazer, as well as under a commercial agreement between RedBird IMI and the Barclay family, who are barred from influencing
The Telegraph as a result.
It is understood that based on conversations with the Barclay family and Nadhim Zahawi, the former Cabinet minister, RedBird IMI had expected to be able to convert its loan to ownership of The Telegraph almost immediately, with relatively low regulatory hurdles to clear. Instead, the deal is held in limbo for regulatory scrutiny, which the media analysts Enders have said could take until 2025 including a break for a general election.
A spokesman for the Barclay family declined to comment. Mr McTighe and RedBird IMI also declined to comment.
Many of our readers have raised concerns over the potential sale of Telegraph Media Group to the Abu Dhabi-linked Redbird IMI. While Ofcom carries out its investigation we are inviting the submission of comments on the process. Email salecomments @telegraph.co.uk to have your say.