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RedBird IMI has formally kicked off the process to sell the UK’s Telegraph newspaper and Spectator magazine in an attempt to recoup the £600mn spent on its attempt to take control of the media assets last year.
The US investment group, which is backed by money from Abu Dhabi, on Friday sent out the deal information memorandum — the document containing sales details — to prospective buyers, according to those familiar with the details.
RedBird IMI has fired the starting gun on the second auction in a year for the Telegraph days after its publisher revealed that £278mn was extracted by the Barclays, pushing the group to a big loss. The family controlled the company until it was seized by Lloyds Banking Group last summer after they failed to repay bad debts of more than £1bn.
The sales process for the right-leaning broadsheet also comes less than two weeks before the UK’s general election, when the Conservative government is expected to suffer a wipeout.
RedBird IMI wants first-round bids by the end of July, the people familiar with the process added, leading to a deal most likely later in the summer. This would mean that the newspaper would not have had a permanent owner for more than a year, during which it has been overseen by a small group of independent directors.
More than 20 parties have been sent the information in preparation for initial bids, another person with knowledge of the deal said, including investment groups and media owners from the UK and overseas.
Raine and Robey Warshaw, the group’s advisers, have whittled those down from a longer list following initial expressions of interest, people said. Investors can either bid for the Telegraph or the Spectator, or try to buy both.
Bidders predicted the Spectator would attract a larger number of bids, given a lower price range.
A RedBird IMI spokesperson confirmed that the sales process has started. They added: “Prospective owners are now able to submit their initial bids from today. This has been a thorough process which involved speaking to interested parties from around the globe and it is no surprise that interest has remained extremely strong.”
An initial sales process overseen by Lloyds was short-circuited by a surprise deal to buy the debt behind the newspaper by RedBird IMI.
However, this deal, which came with an option to convert to full ownership, was then blocked by the UK government, which had concerns over press freedoms given the funding for RedBird IMI from Abu Dhabi.
The decision to restart the process comes after the publication of the group’s results, which give potential bidders the latest financial information. This revealed a £278mn provision owing to loans taken out of the group by the Barclay family that are unlikely to be repaid. The publisher also warned of “potential irregularities” in the recording of historic transactions between companies within the group.
The provision pushed the newspaper to a loss of £245mn last year despite a 5 per cent rise in turnover to £268mn. Other loans have been taken by the family from the Spectator magazine, according to a person familiar with the matter. These were taken in lieu of dividends, they said.
Any potential financial irregularities will not have any impact on the sale of the company, which will be put in a separated structure as part of “hive down” of the assets. After the provisions were stripped out, underlying earnings rose more than a quarter to £60mn, according to the accounts this week.
A spokesperson for the Barclays said: “Throughout the family’s ownership, the business has been managed responsibly and within all legal frameworks, with all accounts approved by auditors.”
