Barclay family in last-ditch attempt to regain control of Telegraph

The former owners of the Daily and Sunday Telegraph have made an attempt to regain control of their media assets after they were put up for a sale in a bitter row with lenders.

The Barclay family has submitted an offer to Lloyds Banking Group that would reportedly allow them to write off some of the nearly £1bn in debts owed to the group’s subsidiary, Bank of Scotland.

It made the move on Wednesday, hours after Bank of Scotland appointed AlixPartners as receiver to the publisher’s holding company in a move to seize the shares owned by the Barclay family.

Bank of Scotland was frustrated at the lack of repayment of the loans, which were bought by Lloyds as part of its takeover of HBOS during the financial crisis in 2008.

The bank has rejected the latest in a series of proposals to restructure the debts, according to Sky News, which first reported the Barclays’ offer.

Sources close to the situation said talks were continuing and the Barclay family could still regain control.

Carlyle, a private equity firm which holds a portion of the debt in Barclaybacked companies including online retail group Very, is also reportedly involved in the talks.

Bank of Scotland said on Wednesday that it had replaced board members appointed by the Barclay family with independent directors, and was moving to auction off the Telegraph titles and the Spectator magazine.

Twin brothers David and Frederick Barclay bought the Telegraph Media Group in a £665m sale in 2004. The Telegraph’s financial position has improved in recent years and it reported profits of almost £30m last year. Any deal is expected to value the media assets at about £600m, meaning about £400m of debts would remain outstanding even if the entire proceeds of any sale were used to repay the loan.

When the Barclay brothers bought the Daily Telegraph from a man facing a spell in prison, an almost throwaway accusation that they had taken advantage of an “owner in distress” ended with them suing the Times for criminal libel in France. It is perhaps ironic that their own distress as sellers almost 20 years later was first revealed by the same Rupert Murdoch-owned rival newspaper.

Yet the Barclay family has been “de-possessed” of the Telegraph Media Group not by a wealthier rival, but by their own bank manager. In a challenging economic environment, many people fear their house being taken over by the mortgage provider – but not many are struggling to repay debts of almost £1bn.

How brothers who pursued the Telegraph for years ended up with Lloyds’ Bank of Scotland seizing control and appointing a receiver is a story not just of age and family fallout, but the death of a way of doing business. They built a multibillion-pound business empire, still valued at £6bn in the last issue of the Sunday Times Rich List, from scratch by borrowing huge amounts of money in the “loadsamoney” years that preceded the 2008 financial crisis.

Their story wasn’t meant to end this way. Sir David Barclay, the elder twin by 10 minutes and the driving force behind their unlikely career as newspaper owners, said buying a paper considered the house organ of the Conservative party was a “once-in-a-lifetime opportunity”. But David died, aged 86, in January 2021, leaving a family divided.

After eight decades of success with his once inseparable twin brother, the siblings had fallen out spectacularly over money and succession. Sir Frederick Barclay sued his brothers’ sons, grandson and longest-serving aide, Philip Peters, in the high court for bugging his private conversations over the sale of another trophy asset, the Ritz hotel – a crime he called “commercial espionage on an industrial scale”. The two sides only settled after David died, by which time Frederick was facing a £100m order to pay his ex-wife in a divorce settlement.

Two years on, he has still not paid, prompting the judge last month to summons his nephew Aidan Barclay, the largest shareholder of the family business, to explain where the money was. It was that high court appearance – in which the chair of the Telegraph and 100 other companies said that business was “not actually easy” and that it was a time of “doom and gloom” – that seems to have acted as the catalyst for bankers unable to reach an agreement with the family over the repayment of debts.

Such an unusual public battle for an intensely private family has exposed a wildly complicated financial structure and the perils of borrowing too much for expansion. Lloyds’ Bank of Scotland, itself the result of a crisis restructuring that swallowed up the Bank of Scotland in 2009, described the decision to appoint receivers this week as “an act of last resort” after the failure of “numerous discussions with B.UK’s parent company, Penultimate Investment Holdings Limited”.

Until the bank made this statement, even some in the City did not realise that the Telegraph was owned not just by an offshore company registered in Jersey, but via a Bermuda-based business, B.UK, itself owned by Penultimate Investments Holdings Ltd, registered in 2021 in the British Virgin Islands.

The brothers had been so keen to buy the Telegraph that when an attempt to do a backroom deal with the then owner, Conrad Black, was blocked by other shareholders, they ended up paying £665m for it in July 2004, £400m more than the original offer. Having bought Littlewoods’ retail business, now called Very, just six months before, the brothers initially raised £272m in debt from the Bank of Scotland to plug the gap. Scroll forward 19 years and this debt has snowballed.

After appointing receivers AlixPartners to run the group while it prepares for a sell-off, Lloyds removed Aidan and Howard Barclay, the eldest of the family’s second generation, from the newspaper board along with Peters, who has worked for the family for decades.

The two sides- the Barclays and the bank – are continuing talks, with the family understood to have made a last-ditch effort on Wednesday to regain control. Both said they were still hopeful an agreement could be reached and stressed the financial health and robust performance of the Telegraph titles and the Spectator.

Although the value of Telegraph Media Group has fallen far from the high price in 2004 and has been largely written off in company accounts, the “for sale” sign is expected to attract interest.

Interest is expected to come not just from rivals such as DMGT, the owner of the equally Brexitbacking Daily Mail, but from the former editor turned entrepreneur William Lewis, as well as two rivals who were beaten by the Barclays in 2004 – Axel Springer and David Montgomery’s National World.

The brother's case against the Times, which lasted more than two years, ended with a clarification published on page 61 of the Murdoch-owned Times, which did not pay any damages but stated: “We are happy to make the position clear and regret any distress caused.” In return, the Barclays dropped the case.

It was one of many court cases against journalists brought by the brothers, whose passion for print never really matched their passion for privacy. Any sale of the Telegraph titles will bring to an end their reign as the UK’s most unlikely newspaper owners.