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RedBird IMI recruits advisers to decide the fate of the Daily Telegraph

The Abu Dhabi-backed group, whose bid to buy the Daily Telegraph risks being thwarted, is calling on advisers to determine the fate of the right-wing British newspaper.

Sky News has learned that Raine Group, which is best known in Britain for its role in recent transactions involving Manchester United And Chelsea football clubs, is to be appointed alongside Robey Warshaw to advise on the Telegraph’s next phases of ownership.

Sources close to the Telegraph said the appointments for the two companies are expected to be finalized in the coming days.

Their roles are expected to ultimately lead to a new auction of the newspaper, its Sunday sister title and The Spectator magazine, but this is only expected to be officially decided after further discussions between RedBird IMI and the Ministry of Culture, Media and Sports (DCMS). ).

RedBird IMI is partly owned by US-based RedBird and majority owned by Abu Dhabi-based IMI, which is backed by UAE Deputy Prime Minister and ultimate owner of Manchester City Football Club, Sheikh Mansour bin Zayed Al Nahyan.

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The company holds a call option which aimed to convert £600 million of debt into an equity stake in the UK media assets.

This agreement was, however, made impossible by the will of the government adoption of legislative changes prevent any ownership of British national newspapers by investors linked to foreign states.

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Lucy Frazer, the Culture Secretary, also said that she willing to refer RedBird IMI’s purchase of Telegraph shares was the subject of an in-depth investigation by the Competition and Markets Authority.

One insider said the complexity of the ongoing sales process could act as a deterrent to potential bidders, given that restrictions on RedBird IMI and the Barclay family, the actual owners of the papers, could harm the ability of buyers to exercise due diligence.

The fate of the Telegraph, historically a strong supporter of the Conservative Party, has been up in the air for almost a year after Lloyds Banking Group took control of its parent companies when Barclays fell behind on its debt repayments.

Since then, a number of bidders – including Lord Rothermere, owner of the Daily Mail and GB News – shareholder Sir Paul Marshall – have expressed their interest in purchasing the securities.

The £600 million takeover of RedBird IMI was fiercely opposed by Telegraph journalists and Conservative politicians in both houses of Parliament.

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The putative owner had sought to defuse controversy over the deal by offering legally binding guarantees on editorial freedom and in January restructured its bid to form a new British holding company that would own the Telegraph titles and Spectator magazine.

An initial Public Interest Intervention Notice (PIIN) was issued by Ms Frazer late last year, submitting a possible debt-for-equity swap subjecting RedBird IMI’s ownership of securities to scrutiny competition and media regulators.

The takeover is seen as particularly sensitive because of its proximity to a British general election in which the Conservatives are likely to have a good chance of winning an absolute majority.

The independent directors of holding company Telegraph were parachuted in by Lloyds Banking Group last year after the lender took control of the newspapers from their long-term owners, the Barclay family.

However, the sale process was pre-empted by RedBird IMI which repaid £1.16 billion of loans owed by Barclays to Lloyds, of which £600 million was used to purchase a call option to buy the papers and the rest in the form of a loan secured by other family assets. including online retailer Very Group.

Last month, independent directors appointed to oversee the sale of the Daily Telegraph were warned by Ms Frazer that the removal of the paper’s two most senior executives was in breach of a government order – and that any further transgressions could result in a fine of several million pounds.

Under the terms of the Public Interest Intervention Notice (PIIN) issued by Ms Frazer, RedBird IMI is prohibited from exercising any influence over the securities while investigations by regulators are ongoing.

Raine is one of the most prolific advisors on media, entertainment and sports deals in investment banking, while Robey Warshaw – created by Sir Simon Robey and including George Osborne, the former chancellor, is now a partner – regularly figures in Britain’s most important companies. buyouts and mergers.

RedBird IMI, Robey Warshaw and Raine all declined to comment, while DCMS has been contacted for comment.

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