Lloyds in talks with Barclay family over Very Group
Lender that seized Telegraph Media Group holds a guarantee over the retail and financial services business
Lloyds Banking Group is in talks with the Barclay family and private equity firm Carlyle over the future of the Very retail and financial services business months after seizing the Telegraph Media Group.
The UK lender holds a guarantee in the overseas holding companies controlling Very Group, that is linked to the distressed debt behind the Telegraph, according to people with knowledge of the discussions. Very is the former Littlewoods and Shop Direct business based in Liverpool owned by the Barclays.
This potentially puts the holding companies on the hook for the £1.1bn in debt owed by the Barclay family to Lloyds, which placed the Telegraph into receivership in June, according to two people close to the situation.
The discussions will spark fresh scrutiny over the remaining businesses owned by the Barclay family after they lost control of the Telegraph. The Barclay family are seeking offers for delivery business Yodel, which is backed by about £180mn of debt provided by HSBC.
The existence of the debt guarantee could further complicate the relationship between the Barclays and Lloyds.
The family and the lender have been in discussions over the debt and the guarantee, one person said. Carlyle, which holds debt in the loan structure that backs Very, is also involved in the talks, the people added.
“[There are] discussions — the bank hasn’t enforced the guarantee, but it could in theory. It has sorted the Telegraph side and now the question is the Very Group”, one person said.
The person added that the talks were “ongoing and productive” and Very was not in any distress. The business enjoyed a boom in ecommerce sales during the pandemic and whilst this has faded, it is still profitable.
The talks instead concern the complex financial structures that sit above the operating companies, some of which can be seen in Companies House filings and through charges registered against offshore-based groups.
The Very Group has more than £1.5bn in securitised loans, and bonds of £575mn in its operating companies. However, Carlyle is owed debts of more than £300mn, which sit in holding companies above these groups, according to a person familiar with the situation.
Companies House filings show that shares in The Very Group were pledged as collateral for this holding company loan in July 2021.
Carlyle lent this money to Very in 2021 to help repay outstanding commitments of £280mn to Greensill Capital, the supply chain financing group that was at the time in administration. People close to the deal at the time said that the family had hoped to list the Very group to help reimburse the debt.
While the Carlyle debt is more senior in the overall corporate structure, the people close to the process said that Lloyds in theory could enforce its guarantee and take charge of the holding companies sitting above this debt.
A spokesperson for the Barclay family said other assets owned by the family including the Very Group “are unaffected and continue to operate as normal” by the Telegraph receivership.
The person added: “This is a matter between the shareholders and Lloyds Banking Group only, and The Very Group is materially removed from it. The businesses across the group are performing well, have strong liquidity and have their own distinct funding arrangements.”
A spokesperson for Carlyle said: “We have a good relationship with the Barclay family and remain fully supportive of The Very Group, which is performing strongly.”
Lloyds declined to comment. HSBC could not immediately comment.
The Very Group is an online retailer and financial services provider formed through merger of the former Littlewoods and Shop Direct companies, bringing together companies that have their roots in mail order and the football pools.
In results for the 39 week period ended 1 April 2023, revenue increased slightly to £1.7bn, with earnings before interest, tax, depreciation and amortisation of £190.1mn, down from £221mn the year before. Pre-tax profit was £11.7mn, down from £58.5mn.