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The publisher of the UK’s Telegraph newspaper warned of “potential irregularities” as it disclosed close to £300mn extracted by the Barclay family that pushed the media group into a big loss.
Accounts published on Wednesday showed that the Telegraph Media Group — at the centre of a protracted and politically fraught auction process — took a £278mn provision for amounts paid to its parent companies, owned by the Barclay family. The money may never be paid back, the group said in a statement.
The group made a loss of £245mn in the year to December 2023, the accounts show.
As well as disclosing the £278mn provision, the Telegraph said on Wednesday: “A detailed review of historic transactions was undertaken in respect of amounts paid to, and received from, group companies and related parties.
“The review identified potential irregularities in the recording of such transactions and although there have been no changes to the assets and liabilities recorded, there is a potential risk of future possible repayment claims against the company and group in respect of such transactions.”
Lloyds Banking Group seized control of the publisher of the right-leaning broadsheet and Spectator magazine last year after the Barclays failed to repay bad debts of more than £1bn. A sale to RedBird IMI, the Abu Dhabi-backed investment group, was blocked by the UK government over concerns about foreign ownership of a national newspaper. A second auction process is in train.
UK authorities were alerted during the administration process by Lloyds and the company’s independent directors about the movement of money out of the business, according to people familiar with the matter.
The movement of funds was related to lending to the Telegraph’s parent companies, the people said. Tracing the money is likely to be complicated by the corporate structure used by the Barclay family.
A spokesperson for the Barclays said the family was “proud of its track record of investment in TMG, which under its ownership has been transformed into a successful digital and print media brand, with over 1mn subscribers”.
“Throughout the family’s ownership the business has been managed responsibly and within all legal frameworks, with all accounts approved by auditors,” they added.
The discovery of potential financial irregularities is not expected to have any impact on the future sale of the company, given moves by its independent directors to create a separated structure as part of a so-called “hive down” of its assets.
Technically, the newspaper group is still owned by the Barclay family, although they have no ability to control or influence the Telegraph, which is being run by a small group of independent directors.
RedBird IMI structured its abandoned deal by acquiring the debt from Lloyds. The debt carried an option to convert into equity of the group. This means that RedBird IMI has been left with the debt of the newspaper, which it will seek to sell with the conversion option.
Revenues rose to £268mn in 2023 from £254mn a year earlier when TMG reported profits of £33mn.
This story has been amended to reflect that it is RedBird IMI that has been left with the debt of the newspaper
