Telegraph owners may have to sell titles

THE cash crisis facing the Canadian owners of the Daily Telegraph deepened last night, with Hollinger Inc indicating that it may be forced to sell some titles in an attempt to reduce its crippling debt.

The news will intensify speculation about the future of the newspaper, with the Harrods owner, Mohamed al-Fayed, and the Daily Express owner, Richard Desmond, among the list of potential buyers.

In a filing to Canadian regulators yesterday, Hollinger Inc, the controlling owner of Hollinger International, said it was under increased pressure because of the shortfall between dividends and fees from its subsidiaries, and operating costs.

Hollinger International, whose chief executive Lord Conrad Black was forced to resign last month over allegations of poor management and accounting, owns the Sunday Telegraph and the Daily Telegraph - which are valued at between 400 million and 500m.

The crisis at the company, which also owns the Chicago Sun-Times and the Jerusalem Post, has sparked a number of potential buyers for the historic Telegraph titles to emerge.

Among those to show an interest are Mr Desmond, The Daily Mail & General Trust (DMGT), which publishes the Mail on Sunday and Aberdeen's Press and Journal, The Washington Post, Mr Fayed, and a management buy-out team.

Mr Fayed has already met Mr Desmond, and held talks with another probable bidder about printing the paper for him if his bid was successful.

DMGT threw its hat into the ring after insisting it would not need to sell off any assets in order to buy.

Last month Mr Desmond said he had lined up backing from the banking groups HBOS and HSBC to make a bid, should the Telegraph group come on the market. It is believed he thinks that, as well as being debt-free, he has another trump card in any bidding war for the assets - his 50 per cent stake in Westferry, the printing group he shares with the Telegraph.

Other companies reported to be interested in making a bid for the titles are venture capital groups 3i and Apax Partners.

Yesterday’s filing threw fresh light on Hollinger’s complex web of holding and operating companies - a structure that has raised the ire of investors and corporate governance advocates. It showed the parent company is reliant on Ravelston Corporation - a private holding company controlled by Lord Black, to cover the shortfalls.

Ravelston in turn relies on management fees paid to it by Hollinger International.