Reed Elsevier has been forced to offer a loan to would-be buyers of its £1billion-plus business magazines division in an attempt to kick-start an auction of the unit behind Farmers Weekly and Flight International.

This week the electronic information giant began to send out non-disclosure agreements for interested parties to sign after it managed to arrange enough loans that could be used by a potential buyer.

However, it could not persuade banks to provide enough financing that would be attractive to a private equity group - by far the most likely buyer of the business. It has been forced to offer its own top-up loan to sweeten the deal.

Reed has been trying for several weeks to arrange a financing package to begin an auction process that was first announced in February. The continuing negotiations with banks, led by UBS, delayed the release of the initial information memorandum for buyers, which originally had been due to be released in mid-May.

The company's decision to offer a loan to whoever is willing to take the Reed Business Information (RBI) division off its hands demonstrates that the credit crunch has barely eased. Reed felt that it could not credibly begin any kind of auction without having the loans in place.

UBS has not yet told bidders the exact details of the loan on offer. It is thought that a bank syndicate is willing to stump up a little more than £450 million, with Reed Elsevier potentially offering more than £100 million on top, for a business that could be worth up to £1.25 billion.

Those interested are dominated by private equity groups, such as Advent, 3i, Candover, Cinven, Providence Equity, Permira and Apax Partners - all of which would need financing to complete the deal. They are being asked to sign non-disclosure agreements this week by UBS, Reed's adviser, and an information memorandum will follow next week. Private equity groups can take advantage of the loans on offer, although it is possible for them to strike their own agreements if they can find better terms elsewhere. However, the so-called staple-on financing acts as a form of protection for Reed should loan markets deteriorate further.

Trading at RBI is believed to remain in line with expectations, with no sign of an advertising downturn hitting the titles. The division is known to have generated £906 million of sales last year.

Underlying profits are thought to have amounted to £160 million. The exact figure is not available publicly because the operations being sold do not include the company's fast-growing exhibitions unit.

Reed Elsevier declined to comment yesterday, but the company is understood to be aiming to sell the business in one piece. Rivals are sceptical about whether that can be achieved and it is possible that RBI could be broken up.

RBI was put up for sale after its parent company announced plans to buy ChoicePoint, a provider of risk management information for insurers, for $4.1 billion (£2.1 billion). Reed Elsevier wants to exit all advertising-dependent businesses and concen-trate on subscription-based electronic information, which it believes is faster-growing and less susceptible to the advertising cycle.

Mastheads on the block

— Reed Business Information publishes more than 100 professional magazines and websites in Britain, 80 in the United States and has operations throughout the world

— It includes some of the most famous names in publishing, such as Variety, the film industry bible, in America and Computer Weekly in Britain

— The titles are being sold without the related and faster-growing exhibitions business, leaving some rivals to question their worth

— United Business Media said that it was not prepared to chase what it described as orphan assets, arguing that without related conferences, professional publications had far less value and a limited future in the era of digital information

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