Sly Bailey, the chief executive of Trinity Mirror, yesterday defended her decision not to sell its Midlands newspapers as it disposed of the Racing Post for a lower than expected £170 million to FL Partners, the Irish private equity firm.

The decision means that the auctions, which the Daily Mirror owner had hoped would raise about £500 million, have made only £263 million.

“The credit crunch has made life more difficult. We always said that we were not sellers at any price,” Ms Bailey said. “We have offloaded eight of the 11 businesses we planned to sell.”

The group said that the decision not to sell the Midlands titles, which include The Birmingham Post and two remaining businesses in the South East would “deliver greater value to shareholders than a sale in current market conditions”.

Trinity Mirror said that it intended to return in excess of £100 million to shareholders, although analysts said the group could manage closer to £200 million.

Vijay Vaghela, the finance director, said: “If we were deciding how to return money to shareholders today, it would most likely be through a share buyback.” A special dividend was previously thought more likely.

Trinity Mirror said that the amount, mechanism and timing for returning capital to shareholders would be set once the group had confirmed with trustees how much it will contribute to its pension fund. A decision is expected in about eight weeks.

Despite industry criticism for its failure to offload the titles, leading Trinity Mirror shareholders yesterday refused to criticise the board and said that they believed Ms Bailey’s position was secure.

One said: “Trinity Mirror cannot control market conditions. They are doing a very good job under very difficult circumstances.” Another large shareholder said that it had done better than many other groups under similar conditions.

The sale of the Racing Post to FL Partners, which is fronted by a former editor of the title, is understood to have gone at the bottom end of the mooted asking price.

The £263 million raised included £92.9 million picked up from three separate deals with Northcliffe, Dunfermline Press and Tindle Newspapers.

Ms Bailey emphasised that the sale of the racing newspaper marked the end to disposals at the group. Trinity Mirror said it planned to retain the Midlands titles and develop their market positions in print and digital.

The Midlands titles, which attracted the interest of Exponent and Barclays Private Equity, were expected to be worth about £250 million.

Sheikh Mohammed bin Rashid Al Maktoum, who founded the title in 1986 and holds the rights to the Racing Post name, has asked for Trinity Mirror to make a £10 million donation to racing charities as a condition of the sale.

FL Partners said that its focus was in developing the Racing Post’s online offering. Alan Byrne, the Racing Post’s editor between 1992 and 2002, who has been appointed chief executive and editor-in-chief, said the group would invest “millions of pounds” into developing the online offering.

He said: “We have told staff that we are in this for the long term and we have a passion for racing. We aim to attract more people online and introduce new services. We don’t want the website to repeat what is in the newspaper.”

Ms Bailey added that the credit crunch had not yet affected advertising at the group, although she remained cautious about the advertising market in 2008.

“As indicated at the time of our interim announcement in August, the board remains confident that our 2007 performance will be in line with expectations,” Trinity Mirror said.

The group’s shares closed up 0.79 per cent at 415¼p.

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