The government has dealt a blow to the Barclay family’s efforts to strike a deal to transfer control of the Telegraph and Spectator to a consortium backed by the UAE, after confirming that it is launching an investigation into whether it raises serious public interest concerns.
The culture secretary, Lucy Frazer, has issued a public interest intervention notice (PIIN) triggering an in-depth inquiry by Ofcom, the media regulator, into whether the complex deal could breach requirements including the need for accurate presentation of news, free expression of opinion and sufficient plurality of views and persons with control of ownership.
The Barclays are attempting to push through a deal with Lloyds Bank, which took control of the titles in June after the family failed to repay £1.16bn in debt, under which the investment firm RedBird IMI would repay the loans and swiftly move to convert them into equity to takeover the titles.
RedBird IMI is a joint venture between the US company RedBird Capital and International Media Investments (IMI) of Abu Dhabi, the investment vehicle for Sheikh Mansour bin Zayed Al Nahyan.
The sheikh, who also provides most of the funding for RedBird IMI, is vice-president of the United Arab Emirates and owns Manchester City football club.
The government’s expected move to issue a PIIN could put the Barclay family’s deal in jeopardy because an investigation by Ofcom, and also by the Competition and Markets Authority on competition grounds because of the change in ownership, could take many months.
The Barclay family has until 1 December to complete due diligence with Lloyds and RedBird IMI and repay the debts, before an adjourned court hearing in the British Virgin Islands which would liquidate a company linked to the media group.
If the Barclay family has not repaid the debts by 4 December, it is not expected to oppose the liquidation of the holding company.
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A sale process of the Telegraph and Spectator would then resume.