The Barclay family has repaid nearly £1.2 billion of debt to Lloyds Bank, potentially allowing control of The Telegraph newspaper to be transferred to an Abu Dhabi-backed fund.

Lloyds confirmed receipt of the money on Monday, having seized control of Telegraph Media Group (TMG) – which also owns the Spectator – over the unpaid debt in June.

The move follows a government probe into the proposed takeover amid security and free speech concerns.

Lloyds Bank confirmed the debt of Penultimate Investments Holding Limited (PIHL), the holding company, had been repaid. The Telegraph and The Spectator titles have been removed from receivership.

“We can confirm the repayment of the PIHL facilities has now completed,” the bank said.

“We are always keen to work constructively with customers who get into difficulty with their repayments to reach an amicable solution.

“We’d like to thank all parties for their role in reaching this point.”

The transfer of funds meant a court hearing due to be held on Monday, which could have liquidated a Barclay family holding company, did not go ahead.

The Barclay Family reached a deal last month with RedBird IMI, an investment fund joint-owned by the United Arab Emirates’ Vice President Sheikh Mansour bin Zayed Al Nahyan, to help finance the debt repayment.

The next step is intended to see a debt-for-equity swap, which would see RedBird IMI gaining control of the newspaper group

However last week, Culture Secretary Lucy Frazer triggered a Public Interest Intervention Notice (PIIN) following – concerns the deal would see The Telegraph and The Spectator titles purchased by what is essentially a foreign power.

She also imposed and an interim enforcement (IEO) order that will impose a series of restrictions on TMG during the proposed takeover, including prohibiting the removal of top Daily Telegraph journalists from the paper.

Ofcom and the Competition and Markets Authority (CMA) will now investigate the potential takeover and the debt-for-equity deal is on hold until they report back on 26 January.

The Barclay family and RedBird IMI are understood to have agreed to these restrictions.

Dozens of Conservative MPs, including the former party leader Sir Iain Duncan Smith, called for the deal to face further investigation earlier last week, over a potential threat to national security.

In a letter to Deputy Prime Minister Oliver Dowden, the group of MPs said: “During a time of increased geopolitical tensions, information warfare is more relevant than ever. And with the UAE’s increasingly influential position as a mediator and power broker, the risk for interference in Britain’s national conversation seems self-evident if the acquisition goes ahead.

“The influence it would give to a foreign government that is strengthening its relationship with Beijing at a time of growing tensions is even more troubling.”

Lloyds had been trying to sell the right-wing media group since the summer with several well-known figures expressing an interest, including hedge-fund tycoon and GB News owner Paul Marshall, and Daily Mail owner DMGT.

Brothers Sir David and Sir Frederick Barclay bought The Telegraph Media Group in 2004, before Sir David Barclay’s death in 2021.

Their newsgroup is a profitable company, reporting a 4 per cent year-on-year increase in turnover for 2022, despite the Barclay family racking up significant debt over the years.

i is owned by Harmsworth Media, a publishing division of DMGT that also contains New Scientist magazine, and has complete editorial independence.