Buy-out deal sees Bates look to Leeds’ future

LEEDS chairman Ken Bates confirmed his reputation as football’s wheeler-dealer supreme yesterday by putting the club into administration and immediately forming a new company to buy it back again.

The move, for an undisclosed fee, wipes out a substantial chunk of Leeds’ £35million (€51.3m) debt and leaves Bates and his Swiss backers Forward Sports Fund in charge of the club and remaining assets.

The Football League have imposed the statutory 10-point deduction for going into administration which confirms Leeds’ relegation to League One, but with the club all-but demoted anyway it means they will start next season with a clean slate.

Bates refused to shoulder any of the blame for Leeds’ predicament, and in a statement criticised the club’s previous regimes.

He said: “The action taken brings to an end the financial legacy left by others that we have spent millions of pounds trying to settle.

“But the important thing now is not to view this as the end, but the beginning of a new era.”

Bates used finance companies based in Switzerland and the British Virgin Islands (BVI) to provide investment for his initial takeover of Leeds.

In his statement Bates said three companies, Astor Investment Holdings, Krato Trust and Forward Sports Fund, “will collectively lose in excess of £22m (€32.2m)”.

However despite being leading creditors they should not lose out too much as Forward Sports Fund will own the shares of the new company — Leeds United Football Club Limited — and it is also thought that BVI-registered Astor Investment have a stake in Forward Sports Fund.

In reality the biggest loser could be the taxman, who was pushing for a debt of around £5m (€7.3m) to be paid. As club chairman, Bates was in a position to chose the club’s administrators KPMG, who immediately agreed to sell Leeds back to the newly-formed company with Bates, chief executive Shaun Harvey and director Mark Taylor appointed as the new company’s directors.

The deal however is subject to approval by creditors, at a meeting later this month, and by the Football League. Bates said he was now looking for “serious investors” to come forward.

He added: “The shares are owned by Forward Sports Fund who would welcome serious investors to help make this club financially strong again so that we can mount a challenge to firstly gain promotion from League One, and ultimately the Premiership.

“Since January 2005 we have sought additional investment and have followed up every approach received but refused to deal with unnamed consortiums represented by third parties, if indeed they ever existed.

“To avoid time-wasters we have always required proof of funds first, whereupon they often disappear.

“The club are staying at Elland Road and we must unite and take on all those in front of us.”

Football League communications director John Nagle confirmed the immediate points deduction ahead of this weekend’s final game of the season against Derby.

Nagle said: “Following confirmation that Leeds United have obtained an administration order, the Football League can confirm that the club have been deducted 10 points from its 2006-07 tally.

Leeds would have to settle all ‘football debts’ — any debts to other clubs, football bodies and to players, he added.