- Barclay repays Lloyds loan
- Lloyds investors may benefit
- Telegraph auction postponed
If the Barclay family fully repays the bank’s £1.16 billion, investors in Britain’s largest high street bank will benefit.
Early next year, Lloyds Banking Group shareholders may receive a windfall of over £500 million. This is due to an agreement with the proprietors of The Daily Telegraph to repay loans fully.
The largest high street lender in the United Kingdom will be able to write back over £500 million on the value of a £700 million loan extended to the Barclay family years ago.
According to one banking analyst, the writeback, the exact magnitude of which will be revealed in Lloyds’ annual results in February, would enable the company to return a substantial quantity of capital to investors, possibly via a special dividend or share repurchase.
Telegraph Loan Repayment and Regulatory Scrutiny
Early the following week, Barclays is anticipated to transfer £1.16 billion to Lloyds by a deal reached between the family and RedBird IMI, an Abu Dhabi-based vehicle that members of the royal family of the Gulf state primarily fund.
RedBird IMI plans to convert £600 million of the debt into Telegraph and Spectator shares if regulatory approval is granted.
Culture Secretary Lucy Frazer verified that she issued a Public Interest Intervention Notice (PIIN). This notice requires Ofcom and the Competition and Markets Authority to examine the transaction.
After January, Ms. Frazer will know if the regulators will allow her to buy broadsheet periodicals.
Sir Iain Duncan Smith, the former leader of the Conservative Party, is among the dozens of Members of Parliament who have demanded that the agreement be investigated further under national security statutes.
However, the repayment of the debt to Lloyds remains unaffected by the PIIN.
The bank alerted the government of the debt repayment, and cash are expected to be sent early next week.
Lloyds and its chief executive Charlie Nunn, who had rejected a succession of partial repayment offers from the family submitted since the Telegraph’s holding company was placed into receivership in the summer, will be astounded by the outcome.
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Beyond the principal loan amounting to £700 million, Barclays reimburses over £400 million in interest accrued over an extended period.
“The writeback is pure profit for Lloyds and will flow straight to the bank’s bottom line,” according to the analyst.
Lloyds subtracted most of the initial £700 million loan amount, according to a source.
The bank anticipates that a writeback exceeding £500 million will thus significantly impact its annual profit 2023.
According to analysts, the organisation is reportedly already amassing considerable surplus capital; therefore, without a significant acquisition, Lloyds’ board would be free to return the Telegraph loan windfall to shareholders.
RedBird IMI, an organisation managed by former CNN president Jeff Zucker and primarily funded by Manchester City owner Sheikh Mansour bin Zayed Al Nahyan, has committed to maintaining The Telegraph’s editorial independence.
A court proceeding in the British Virgin Islands to liquidate a Barclay company associated with the newspaper’s ownership will be dissolved due to the Lloyds loan repayment. This will grant the family temporary control over their shares in the broadsheet title.
Nevertheless, Barclays will be obligated to adhere to government-imposed restrictions anticipated to be explained shortly.
Openreach chairman Mike McTighe will lead a trio of independent directors during a public interest probe.
As the struggle for dominance over The Daily Telegraph has swiftly evolved into a multifaceted business and political dispute, tensions have increased between the DCMS and the Foreign Office concerning the United Kingdom’s openness to foreign investment.
Sir Paul Marshall, GB News shareholder and hedge fund billionaire, led a PIIN-supporting group of bidders.
Former Ofcom chairman Ed Richards is campaigning for RedBird IMI through Flint Global, co-founded by Sir Simon Fraser.
Telegraph Auction Postponement
The Telegraph auction, which National World, a London-listed local newspaper publisher, and the proprietor of the Daily Mail, Lord Rothermere, have both expressed interest in, has been postponed until the following month.
The initial bid deadline was extended from November 28 to December 10. This extension was considered in light of the possibility that the Barclay family would fully reimburse Lloyds by December 1.
It is now anticipated that the proposal deadline will be cancelled.
Aidan Barclay, the nephew of Sir Frederick Barclay, presided over the newspapers until June. Sir Frederick Barclay, along with his late twin Sir David, orchestrated the 2004 acquisition of the Telegraph.
For several years, Lloyds and Barclays had been engaged in negotiations. HBOS refinancing loans to them before the 2008 financial crisis was discussed.
A Lloyds spokesperson stated that the board would customarily assess capital distributions before the bank’s annual results. However, they refrained from providing additional comments.
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