Deal with creditors gives Leeds vital breathing space

LEEDS yesterday temporarily staved off the imminent threat of becoming the first Premier League club to go into administration.

After months of hardline negotiations with their major creditors, Leeds have bought themselves valuable time in a bid to secure their future.

Chairman Professor John McKenzie last night confirmed “I am pleased to announce, on behalf of Leeds United plc, that we have now agreed the first stage of a financial restructuring programme”.

Leeds have reached “a standstill agreement” with their creditors and now have until January 19 to seek a potential buyer for the club or significant investor ready to dig them out of the financial mire, however, administration still remains a possibility.

Leeds last week announced their administration fears to the Stock Exchange after a planned £2.2million cash injection from a company known as A.R.M Holdings Ltd, albeit fronted by Sheikh Abdulrahman bin Mubarak Al-Khalifa, failed to materialise.

The exact same sum from deputy plc chairman Allan Leighton was still available, but not enough to bail out Leeds after recently announcing a British club record loss of £49.5million and debts of £78million.

It meant that avoiding administration hinged on discussions which had been ongoing since August, talks initially brokered by McKenzie, and then followed up by chief executive Trevor Birch in the wake of his appointment last month.

Mr Birch finally reached an agreement this week with American institutions Met Life and Teachers, and British firm M&G, the three companies who agreed to a £60million bond in 2001, secured against future season and match-day ticket sales.

The first two repayments have been made, amounting to a crippling £8.77million in interest only, with the debt having hung like a millstone around the club’s neck.

Mr Birch has also thrashed out terms with a company representing Registered European Football Finance Ltd, a Guernsey-based agency to whom Leeds owe a further £21million with regard to the ‘hire purchase’ of several players including Mark Viduka. There could now be a power struggle between Leighton and Al-Khalifa over the next seven weeks, the latter understood to be backed by a consortium of Saudi businessmen.

Leighton yesterday resigned from the board, due to the fact he is understood to be putting together a rescue package of his own and to ensure he is not hamstrung by Stock Market regulations.

But there is also every chance Leighton, who is chairman of the Royal Mail Group, could join forces with Al-Khalifa, who is a member of the Bahrainian royal family and brother of the country’s foreign affairs minister. Meanwhile, Leeds striker Alan Smith claims he is baffled by the fall from grace of his home town club as he said: “Something’s wrong and we don’t know if it’s going to be fixed or not.

“So for the time being we’re just waiting and fingers crossed all goes well, it gets turned around and sorted out.

“We just hope something gets resolved because it’s a massive club with massive support and to see it in the situation it’s in isn’t right.” Smith also concedes to being worried about his future which is seemingly out of his hands given United’s plight and there remains the prospect he could be sold in January.