The Abu Dhabi-backed vehicle which faces being thwarted in its bid to buy The Daily Telegraph is lining up advisers to determine the fate of the right-leaning British newspaper.
Sky News has learnt that Raine Group, which is best-known in Britain for its roles in recent deals involving Manchester United and Chelsea football clubs, is to be appointed alongside Robey Warshaw to advise on the next phases of the Telegraph’s ownership.
Sources close to the Telegraph said the two firms’ appointments were expected to be finalised in the coming days.
Their roles are ultimately likely to lead to a further auction of the newspaper, its Sunday sister title and The Spectator magazine, but that is only expected to be formally decided following further talks between RedBird IMI and the Department for Culture, Media and Sport (DCMS).
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RedBird IMI, which is part-owned by US-based RedBird and majority-owned by Abu Dhabi’s IMI – which is backed by the UAE’s deputy prime minister and ultimate owner of Manchester City Football Club, Sheikh Mansour bin Zayed Al Nahyan – owns a call option which was intended to convert a £600m debt into equity ownership of the British media assets.
That deal has been rendered impossible, however, by the government’s adoption of legislative changes to prevent any ownership of British national newspapers by investors connected to foreign states.
Lucy Frazer, the culture secretary, has also said she is minded to refer the RedBird IMI takeover of the Telegraph titles to an in-depth inquiry by the Competition and Markets Authority.
One insider said the complexity of the ongoing sale process could act as a deterrent to potential bidders, given that restrictions imposed on RedBird IMI and the Barclay family, the newspapers’ beneficial owners, could impair buyers’ ability to undertake due diligence.
The fate of the Telegraph, historically a staunch Conservative Party backer, has been up in the air for close to a year after Lloyds Banking Group seized control of its parent companies after the Barclays fell behind on debt repayments.
Since then, a number of bidders including the Daily Mail proprietor Lord Rothermere and the GB News shareholder Sir Paul Marshall have shown an interest in buying the titles.
RedBird IMI’s £600m takeover has been vehemently opposed by Telegraph journalists and Conservative politicians from both houses of parliament.
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The putative owner had sought to defuse controversy over the deal by offering legally binding assurances over editorial freedom, and in January restructured its bid to incorporate a new UK holding company which would own the Telegraph titles and Spectator magazine.
An initial public interest intervention notice (PIIN) was issued by Ms Frazer late last year which subjected a prospective debt-for-equity swap handing RedBird IMI ownership of the titles to scrutiny by competition and media regulators.
The takeover is viewed as especially sensitive because of its proximity to a UK general election in which the Tories are likely to be at long odds to win an outright majority.
The independent directors of the Telegraph’s holding company were parachuted in by Lloyds Banking Group last year after the lender seized control of the newspapers from their long-standing owners, the Barclay family.
However, the sale process was pre-empted by RedBird IMI repaying £1.16bn of loans owed by the Barclays to Lloyds, with £600m used to purchase a call option to buy the newspapers and the remainder as a loan secured against other family assets, including the online retailer Very Group.
Last month, the independent directors appointed to oversee the sale of The Daily Telegraph were warned by Ms Frazer that the removal of the newspaper’s two most senior executives breached a government order – and that any subsequent transgression could result in a multimillion pound fine.
Under the terms of the Public Interest Intervention Notice (PIIN) issued by Ms Frazer, RedBird IMI is prohibited from exerting any influence over the titles while investigations by regulators are ongoing.
Raine is one of the most prolific advisers on media, entertainment and sports deals in investment banking, while Robey Warshaw – set up by Sir Simon Robey and where George Osborne, the former chancellor, is now a partner – consistently features in Britain’s most prominent corporate takeovers and mergers.
RedBird IMI, Robey Warshaw and Raine all declined to comment, while the DCMS has been contacted for comment.