While Abu Dhabi investors would retain a majority stake, RedBird IMI proposes to acquire control of The Daily Telegraph through the establishment of a new holding company based in the United Kingdom.
The vehicle sponsored by Abu Dhabi is attempting to purchase. A corporate structure amendment is being proposed by The Daily Telegraph in an effort to allay the concerns of its detractors regarding media freedoms.
RedBird IMI has informed ministers that it will establish a new holding company in the United Kingdom to manage the Telegraph titles in response to weeks of criticism from journalists and parliamentarians regarding the £600 million transaction.
Culture secretary Lucy Frazer was due to update the House of Commons on Wednesday. Still, according to Whitehall sources, a new public interest investigation would be necessary to examine RedBird IMI’s acquisition of two of the most influential newspapers in Britain.
According to sources with knowledge of the situation, the ownership structure of the new entity is identical to that of the previous vehicle: IMI in Abu Dhabi owns 75%, and RedBird of the United States owns 25%.
Ms. Frazer issued a public interest intervention notice (PIIN) late last year, prompting competition and media regulators to conduct preliminary scrutiny of the proposed debt-for-equity transaction that would transfer ownership of the titles to RedBird IMI.
The conclusion of those investigations is anticipated this week.
In anticipation of a statement from the House of Commons, RedBird IMI declined to comment, and the Department of Culture, Media, and Sport could not be reached.
Conservative Member of Parliament is urging ministers to conduct a more extensive investigation into the Telegraph takeover, stating that the Abu Dhabi-backed entity seeking to acquire the newspaper may already have “material influence” over it.
Former health minister Neil O’Brien has requested that the culture secretary issue a distinct public interest intervention notice (PIIN) that includes the repayment of a £1.2 billion debt owed to Lloyds Banking Group by RedBird IMI on behalf of the Barclay family.
Numerous analysts anticipate that the CMA will ultimately refer the debt-for-equity swap to a more comprehensive Phase-II investigation, causing months of uncertainty regarding the future of the Telegraph.
RedBird IMI had informed the independent directors of the Telegraph’s parent company that it would ascertain the future ownership of the titles even if it were unable to acquire control of its shares.
The investor based in the Gulf, which is a joint venture between Abu Dhabi-based IMI and RedBird of the United States, had been eager to dispel the rumor that any future auctions would be overseen by the newspaper’s beneficial proprietors, the Barclay family, or its independent directors.
RedBird IMI’s Control Assurance
RedBird IMI held a call option that could be exercised in return for ownership of the media assets. The company believes it would have “complete control” over any process in the event that the government blocks the acquisition.
Numerous members of parliament and peers have gathered in opposition to the transfer, arguing that the UAE has a poor track record of protecting the impartiality of journalists.
Publicly, the editor of The Spectator, which is also involved in the transaction but not subject to the PIIN, and a number of eminent Telegraph writers have expressed concern regarding the possibility that the Abu Dhabi-backed vehicle will acquire control of influential British media assets.
RedBird IMI, whose proposal is led by former CNN president Jeff Zucker, remains confident that the editorial protections it has submitted to Ofcom will allay any concerns and facilitate the transaction’s approval.
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RedBird IMI is obligated to refrain from exerting any influence over the titles during the ongoing investigations conducted by competition and media regulators in accordance with the PIIN issued by Ms. Frazer.
This includes any attempt to merge the Telegraph with other assets or the termination of key executives and editorial personnel.
Leadership Changes Amid Financial Challenges
Cormac O’Shea, the former finance chief of the Telegraph, has subsequently tendered his resignation, and rumors are escalating that Nick Hugh, the CEO of the publications, will soon do the same.
Lloyds Banking Group placed The Telegraph’s holding company into receivership last year due to a protracted dispute regarding the repayment of a £1.16 billion debt.
The Barclay family negotiated an agreement with RedBird IMI, a majority-owned entity controlled by Sheikh Mansour bin Zayed al Nahyan, the ultimate proprietor of Manchester City Football Club, to repay the loans and accrued interest in December.
According to a report in The Times from last month, Whitehall was notified by the independent directors of TMG regarding potential irregularities in the accounts of the family’s media assets. Additionally, the National Crime Agency was reportedly also notified.
In order to finance the loan redemption, RedBird IMI took action that bypassed a Telegraph auction that attracted numerous bidders.
Sir Paul Marshall, a London-listed local newspaper publisher and magnate and shareholder in GB News, Lord Rothermere, the proprietor of Daily Mail, and National World, a hedge fund, had all retained advisors to compile offers for the newspapers.
