Daily Star 30/9/12
By Adrian Stiles
MIDDLE EAST company GFH Capital are facing more frustration as they bid to seal their £52million buy-out of Leeds.
The Bahrain investment firm believed they were close to completing a takeover of the Yorkshire outfit after talks with United owner Ken Bates last week.
But now they are in a fight to see off potential challenges in their bid to seize control of the Championship club by buying up Bates’ 72.85 per cent stake.
The sale has stalled because would-be buyers from Saudi Arabia and the United States are poised.
There was growing confidence that the deal between Bates and GFH Capital was about to be finalised.
But now there is a very real prospect of counter offers surfacing following the appearance of American investors in the Elland Road directors’ box at the Championship clash with Yorkshire rivals Hull 12 days ago.
Sunday, September 30, 2012
The National 30/9/12Concerns have been raised about the funding model for GFH Capital's proposed acquisition of Leeds United. The Bahrain-based equity investor, whose parent bank Gulf Finance House has posted a series of troubled annual reports, has declined to explain how it intends to finance a takeover of the Championship club.
GFH "had accumulated losses of $300.69million contractual obligations...and its current contractual obligations exceeded its liquid assets", according to a May 14 letter from the group's auditors, KPMG. While GFH Capital, a 100 per cent subsidiary, is a separate legal entity with its own funds and balance sheet, there are fears it is planning to purchase Leeds with debt that could be subsequently shifted to the club's balance sheet - an approach used in several high-profile foreign takeovers including Manchester United and Liverpool.
Leeds chairman and majority shareholder Ken Bates has been involved in discussions with the Middle East group since early 2012. GFH were granted exclusivity to pursue a takeover in June, and subsequently agreed a price for Bates' shares. A dispute over completion, however, has rumbled on since late-July with multiple legal teams unable to negotiate a solution.
On Friday, GFH Capital followed up its parent's forced statement to the Bahrain Bourse, with a press release in which it discussed its plans for "sustained investment" in Leeds United without making specific commitments on funding, investment or the acquisition of Elland Road, the club's leased stadium.
The statement said that GFH Capital's "intentions, if successful in its acquisition, is to move the club back to the Premier League as quickly as possible and help to build a sustainable future for the club".
Its chief operating officer, David Haigh, who has been lined up to replace Bates as chairman if the takeover succeeds, added that: "From a business perspective, ownership of an English football club, notably Leeds United, is a great opportunity if the right strategies are in place to benefit from the significant revenues available from renewed broadcasting rights."
A representative of GFH Capital declined to comment on the company's funding model on Saturday night. He confirmed that it was acting as a buyer, not a broker, in the potential transaction.
Saturday, September 29, 2012
El-Hadji Diouf's second-half double helped Leeds register their third straight win and back-to-back successes in the npower Championship.
The controversial Senegalese striker raised eyebrows when teaming up with Leeds manager Neil Warnock in the summer, but has been grabbing the attention for all the right reasons in recent weeks.
Diouf, instrumental in the Yorkshire side's midweek Capital One Cup win over Everton, opened the scoring just after the hour, and although Albert Adomah equalised, he struck again nine minutes from time as Leeds regained the lead.
Midfielder Michael Tonge's thunderbolt clinched Leeds a two-goal advantage with seven minutes remaining and although Adomah's corner deflected off Leeds defender Sam Byram in the 90th minute for an own goal, Warnock's men saw out the remaining minute.
City were dealt a blow just before half-time when defender George Elokobi, making his debut after signing on loan from Wolves on Wednesday, required medical attention following an awkward landing while blocking a cross and was later carried off on a stretcher. Teenager Joe Bryan replaced him.
Striker Jon Stead was the second of three changes for City, while midfielder Neil Kilkenny was back to face his former club.
Goalkeeper Paddy Kenny and skipper Lee Peltier returned to Leeds' starting line-up. Leeds winger Aidy White tested City goalkeeper Tom Heaton with an early header and Kenny did well to hold Robins striker Ryan Taylor's 20-yard shot in a see-saw opening.
The home side went closest to taking the lead in the 15th minute when Liam Fontaine lashed a close-range volley off target and Kenny was in the right place again soon after to catch Stead's header from Martyn Woolford's free-kick.
Stead fired a 20-yard shot straight at the Leeds goalkeeper and miscued from six yards in the 35th minute either side of Leeds midfielder Rudy Austin's textbook volley, which was comfortably snaffled by Heaton.
Woolford went closest to breaking the deadlock when he headed Richard Foster's inch-perfect cross just wide from eight yards.
But it was Leeds who twice threatened to forge ahead shortly after the restart through Austin.
The Jamaica international first headed Diouf's free-kick against the woodwork with Heaton well beaten and then forced the City keeper into a fine save with another header moments later.
Leeds were not to be denied in the 64th minute however. Byram drilled in a superb low cross from the right and Diouf steered the ball into the far corner.
But the Robins refused to buckle and were back on level terms within six minutes.
Right-back Foster swung over another telling cross and Adomah flung himself at the ball to head powerfully home.
Leeds continued to carry the greater threat though and regained the lead in the 81st minute when Diouf pounced in the penalty area to lash home his second following good work by Luciano Becchio.
The visitors effectively put the game to bed two minutes later when Tonge stepped on to the ball 25 yards from goal and unleashed an unstoppable shot into Heaton's top left-hand corner. There was still time for City to pull one back when Adomah's corner flew into the net off Austin's head, but Leeds held on.
Scratching Shed 29/9/12
Investment banks, slowly slurping the lifeblood from a club. To many fans, an investment group purchasing their club would be a nightmare, but this is perhaps too simple. To Leeds, the proposed marriage to GFH Capital might just be a happy one. Investment banks want something back, and that’s why many fans are rightly wary. A few millions draining annually from a club, especially in the Championship, can cripple an otherwise competitive side. Leeds’ poorly timed capital projects highlighted this. But there’s no evidence that GFH Capital will behave in this way – in fact their press release suggests an early stage of significant investment in the side, getting Leeds to the promised land of the Premier League.It’s easily said, not so easily done. Leicester, Bristol City, Nottingham Forest – several clubs have found this. But Leeds is a club too big for the Championship, of that make no mistake. In terms of reputation, every pundit you’ll meet says Leeds are a Premier League side – even Sir Alex Ferguson himself has said on more than one occasion that he misses the club from the EPL – and financially too we’re big enough to avoid relegation scraps upon our return. Leeds’ average attendence in the last season before disillusionment really took hold would put us around 13th in the Premier League this season, despite high ticket prices and 2nd tier football. Our average attendence even now is larger than the capacity of some Premier League stadiums. Meanwhile our turnover seems regularly to outstrip or at least compete with that of demoted teams on Premier League parachute payments, and is easily one of the highest in the Championship.
There is scope for massive growth from Leeds United over the next few years, and that makes it an enticing prospect for investment groups. But financial clout doesn’t guarantee success. Eddie Gray has become a stuck record on the failure of Leicester’s promotion push. Leicester are the perfect example of the wrong way to spend money. First and foremost, they employed a clown in Sven Goran Erikson, a man tailed by a media circus, and with no experience whatsoever of getting out of this physical, 46-match-season league. Then they overpaid a number of up-and-coming players. I’m not alone in concluding that Sven didn’t take to the Championship very successfully, while players went to Leicester sometimes seemingly more interested in the paycheque than in performances on the pitch.
Leeds has already proved it possesses a manager capable of turning money into success. Building a promotion team over half a decade at Sheffield’s second club, walking into a circus with a revolving door at manager-level at QPR, and turning them into league champions. This is Neil Warnock – the man who would gain the record for the greatest number of English promotions if Leeds went up on his watch. Say whatever you like about the style of football his teams play – it’s successful. Just look at QPR’s unstoppable march in 2010-11, just look at our utter domination of Premier League high-fliers Everton. Warnock has spent a few hundred thousand here and there, grabbing the phenomenal Rodolph Austin, and talented youngsters like Jason Pearce and Lee Peltier. Not only that, he’s somehow turned a bad-boy with psychological issues playing with demoted Doncaster last season, into the experienced star he should be. He’s also seemed to completely transform talented but very rough diamonds like Tom Lees and Aidy White into mouth-watering prospects for the future, along with his experienced backroom team. Make no mistake, Neil Warnock and his staff are the men to guide Leeds to the Premier League.
But how do we come up with the cash? Ken Bates won’t spend his own money on the club – who can blame him, honestly? – and despite genuine interest from wealthy individuals over the past five years, actually forging a deal seems very different to generating interest. Step up GFH Capital, whose recent press release suggests that they understand they must speculate at Leeds before they can accumulate in the Premier League.
Arguments that GFH Capital are somehow incapable of running Leeds United are worrying. GFH was caught badly in the recession, making losses in excess of £200m for two years, and is still coming out of its own problems. The deal could also result in yet more hidden ownership, with the funds for a GFHC deal almost certainly coming from a private individual.
Yet the company also boasts of its role deals including the “establishment and development” of the First Energy Bank in Bahrain, a $2billion bank specialising in the energy sector. Leeds then, would hardly seem the biggest deal GFHC have been involved in. Despite auditors expressing concern over GFH Capital, it has made profit this year – £20m or so already, I believe – and although there are increasingly worrying doubts expressed everywhere, they don’t look like small-time cowboys to my unrtained eye. The auditors expressed concern that debt could only be paid on time if assets were shifted (there is, of course, no guarantee of this), but GFHC have since restructured some of their debt. While they made heavy losses during the global downturn, they have been in profit for 18 months and will almost certainly be using another individual’s wealth in this investment.
None have been more critical of GFH Capital’s ability to successfully lead Leeds back to the Premier League than Duncan Castles, writing for Abu Dhabi-based “The National”. Ken Bates referred to one of the claims made by Castles in his programme notes last weekend, calling them “total rubbish”. Despite the very welcome statement from GFH Capital on Friday, concrete evidence is inevitably difficult to establish on this takeover saga. Yet it seems likely that GFH Capital was the group that left Leeds United in June:
very comfortable that they have the financial resources to support the club and that they will have no issues in satisfying the requirements of the Football League’s Owners and Directors Test, unlike many of the previous approaches we have had to endure.
The club have not suggested any change to the party involved in advanced bidding, and if Chairman Bates thinks GFH Capital are sound, that should count for something. Many will know I’m not Mr Bates’ biggest fan, and GFH Capital talk is indeed a cheap way to garner favour with fans. But the noises surrounding Mr Bates over the past four to five months have consistently suggested that his legacy is a key factor in the sale of the club. Make no mistake, Leeds have hit real difficulties this spring, but a younger Bates might just have been contrary enough to have relished the added challenge of an increasingly alienated customer-base and what appeared from the outside short-medium term financial over-extension. As it is, Bates seems to be looking at selling on to an entity willing to continue his strategy for the club.
That strategy is an Arsenal-style sustainable strategy that some might argue simply isn’t possible, or makes things unnecessarily difficult, for a club like Leeds – a club that might justifiably expect Premier League football – but that nevertheless has merits once a club is in the Premier League.
This “Arsenal” approach has its detractors. We argued last spring that the new financial fair play rules could be exploited through lucrative sponsorship deals from businesses loosely connected to the owners of any given club, we also suggested that setting Leeds’ stall out as a renewable club years before the actual rules took hold might be jumping the gun to our detriment.
Nevertheless, the worst that can be levelled at Arsenal is that it has slightly more potential than is realised. Its league positions, going back in time, were: 3rd, 4th, 3rd, 4th, 3rd, 4th, 4th. Arsenal is the embodiment of a mildly successful, stable, football club playing attractive football at the highest level. There’s a lot worse to try to emulate. Indeed, Arsenal aren’t a one-off. Newcastle’s disastrous demotion in 2009 was a shock on a par with Leeds’ demotion in 2004. Protests against chairman Mike Ashley spread, but the club marched straight back to the Premier League. Since then, Newcastle have invested in a good manager, and based their plans on him. Alan Pardew rewarded them with a string of inspired signings, and you’d have to have lived in a cave the last year not to have noticed where this sensible spending ended.
GFH Capital could well be the perfect successors for Ken Bates, following his long-term strategy, and establishing Leeds as a sustainable Premier League club. Fans might be concerned about how much could be taken from the club year-by-year, but we can’t see that far to the future. Nevertheless, the prospect of the company failing, and plunging the club into uncertainty will weigh heavily with fans. The YEP have followed Duncan Castles in expressing caution over this deal.
It is too early to judge these prospective buyers, but I see their press release yesterday as positive, and personally I'd cautiously welcome them to the club if their bid was successful. But there are a lot of questions to answer; in my opinion it's vital for the good of the club that we're able to have healthy debate.
Yorkshire Evening Post 29/9/12The blurb on the website of Gulf Finance House (GFH) has all the watchwords expected of a company’s personal profile: innovative, dynamic, high-value. In every sense that is what a reputable investment bank aspires to be.
By Phil Hay
By Phil Hay
Its mention of money is not coy either. According to GFH it has raised and invested some five billion US dollars in schemes in the Gulf region and beyond. The bank says it has a “track record and specialisation in creating new financial institutions and the conception of high value economic infrastructure projects.”
So far so good from the point of view of Leeds United. The organisation behind the only confirmed bid to buy the Elland Road club comes with promises of cash, vision and innovation. But what do others say about it and what is the independent view of this Bahraini banking institution?
Earlier this year, KPMG – the consultancy firm responsible for managing Leeds United’s administration in 2007 – audited GFH’s accounts for the three months up to March 31.
In a letter to the bank’s board of directors, sent on May 14, KPMG said: “As at March 31, 2012, the Group had accumulated losses of US$300.69million and, as of that date, its current contractual obligations exceeded its liquid assets.
“As a result, the ability of the Group to meet its obligations when due depends on its ability to achieve a timely disposal of assets.
“These factors indicate the existence of material uncertainties which may cast significant doubt about the Group’s ability to continue as a going concern.”
Since then, Gulf Finance House, which made losses in excess of £200million in both 2009 and 2010 but is in profit for the past 18 months, has announced a deal to restructure part of its debt and drawn up a plan to restructure more. GFH said recently that it now expects “sustainable profitability in the long term.”
Others are more doubtful. The YEP has seen a document produced this week by a global market investment firm, in which GFH is discussed as a possible investment opportunity. Independent of KPMG’s analysis, the firm declares itself “wary of GFH’s ability to carry on as a going concern given its continued inability to produce cash from its core operations.” The document also says that “we believe GFH is only staying afloat because of its successful debt restructurings and the continued financial support of its shareholders.”
The relevance of this to Leeds United is entirely dependent on the true structure of the bid to buy the Championship club.
That offer was confirmed by GFH on Thursday morning and is being led by GFH Capital Limited, the private equity firm which is based in Dubai and wholly owned by Gulf Finance House. None of those facts will have come as a surprise to anyone who saw members of GFH Capital’s senior management team at Elland Road for last month’s Championship game against Wolverhampton Wanderers and Saturday’s win over Nottingham Forest. GFH’s statement to the Bahraini stock exchange confirmed a badly kept secret.
But neither that announcement nor the statement published by Leeds and Ken Bates last weekend brought us closer to seeing the full picture of the takeover as those on the inside see it. Gulf Finance House said GFH Capital had “signed an exclusive agreement to lead and arrange the acquisition of Leeds City Holdings, the parent company of LUFC.” It did not say on behalf of whom or with whose money.
On the whole, this process is further forward, with two sides out in the open. Salem Patel, one of the directors of GFH Capital Limited who attended Elland Road last weekend, signed onto Twitter on Thursday and acquired almost 3,000 followers in 24 hours, the majority of them Leeds supporters. He was warmly received, as would-be investors in football clubs often are.
But the combined disclosure from Leeds and Gulf Finance House offered precious little detail that was not known or suspected before. There was no confirmation of whether Bates is planning to sell his 72.85 per cent stake in full or whether United’s chairman wants to retain an interest in the club. There was no stated timescale either. GFH’s statement on Thursday talked of an “acquisition”, which sounds like a takeover by a different description, but went no further. It made a point of saying that the commercial terms of the deal were still subject to a confidentiality clause.
The last comment was crucial. It drew a line through all queries about the precise nature of this takeover and the confusion about who precisely is financing the buy-out of Leeds.
For many months, GFH Capital were believed to be the brokers for a consortium of wealthy individual investors. That might prove to be the case but no-one on either side of the negotiating table will say so publicly. The other possibility is that Gulf Finance House is itself putting up the money to buy Leeds, with GFH Capital heading up the deal. GFH did not say as much in Thursday’s statement but they made a great effort to justify their involvement to the stock exchange, listing valid points about United’s large fanbase and the income on offer if Leeds are promoted to the Premier League.
The Championship club have always been an attractive proposition; a club with untapped potential for anyone with the clout to make them grow rapidly
There are people out there who think they can do so and GFH Capital are leading the race. But at a club where the issue of transparent ownership has been so contentious, two questions were untouched by the events of the past seven days: who, ultimately, is masterminding GFH Capital’s offer? And whose is the money?
Dubai, 27th September 2012. Following the recent announcement confirming its signing of an exclusive agreement to lead and arrange the acquisition of Leeds City Holdings including Leeds United FC from current owners, GFH (Capital), which continues its acquisition talks, has begun working on its future strategies for the club. Its intentions, if successful in its acquisition, is to move the club back to the Premier League as quickly as possible and help to build a sustainable future for the club, both on and off the field. This is expected to not only benefit the club and the surrounding community, but also the entire city of Leeds.
GFH (Capital) CEO and Board Member, Hisham Alrayes commented: "Like many around the world, people from Bahrain and across the Gulf are passionate about the game of football and notably, English clubs - their successes and hardships are a daily talking point. In so many instances this is what bridges the gap between borders and different cultures. We are excited by our intentions for Leeds United and remain fully focused on the specifics of this deal, hoping to conclude a positive outcome as soon as possible."
He continued "Our parent company GFH has successfully steered through tough economic times and we find ourselves in a position of strength and in an enviable market position to lead on fantastic deals such as this."
David Haigh, Deputy Chief Executive of GFH (Capital) said "As a club, Leeds United has it all – passionate loyal fans, a great heritage and masses of potential to return to the Premier League with the right, sustainable investment. From a business perspective, ownership of an English football club, notably Leeds United, is a great opportunity if the right strategies are in place to benefit from the significant revenues available from renewed broadcasting rights. The existing infrastructure of the club and the result of the work of Ken Bates means that Leeds United is ready off the field to compete in the premier league"
He continued "From a personal perspective, I have followed Leeds United since childhood and having been back to Elland Road with my business colleague, Salem Patel and our CEO Hisham Alrayes for the last few home games, it makes us even more determined to acquire the club Leeds United and to see the club prosper."
Salem Patel, Chief Investment Officer and Board Member of GFH Capital commented:
"From very early on in our approach to this deal, we knew Leeds United FC has pedigree but also offers huge potential in terms of the football, the club and the surrounding area. We are keen on waking this sleeping giant, building on and forging a sustainable long term future for the club - both on and off the pitch. We also hope to take back ownership of Elland Road eventually and continue to work closely with Neil Warnock and the team, we intend to show the fans - some of the most passionate in the game - just how we can 'March On Together' to give Leeds United the success it so richly deserves."
GFH Capital Limited
GFH Capital, formerly known as Injazat Capital, is a Middle East private equity investor, advisor and fund manager, providing capital and strategic support for growth companies. With a 10-year track record of top-performing investments and fund management, GFH Capital is one of the region's longest-established private equity firms, and one of the first to be licensed by the Dubai Financial Services Authority.
GFH Capital has undertaken and structured investments of more than USD 8 billion in over 40 companies and across 25 countries. The company has managed healthcare, technology, media, telecommunications (TMT) funds and financial institutions and is a regional leader and is a globally recognised participant in Technology and Health Care investment. It was commended by the International Chamber of Commerce (ICC), the foremost international business organisation, for incorporating and upholding strong principles of corporate governance.
GFH Capital Limited attracts funds from the Dubai Islamic Bank, the World Bank, GE Healthcare, the Islamic Development Bank and regional investors including Gulf Finance House, SEDCO and several high net worth individuals. GFH Capital is a 100% subsidiary of Gulf Finance House.
Gulf Finance House
Gulf Finance House (GFH) was established in 1999. GFH has raised funding of more than US$5 billion to invest in Islamic financial institutions and infrastructure projects harnessing the enormous potential offered by the region's dynamic economies.
GFH has established some of the region's leading financial institutions including First Energy Bank, the world's first Islamic investment bank focused exclusively on the energy sector. Other financial institutions founded by GFH include Khaleeji Commercial Bank in Bahrain, QInvest in Qatar, Arab Finance House in Lebanon, First Leasing Bank in Bahrain and Asia Finance Bank in Malaysia.
GFH projects include GFH's Financial Harbours in the Kingdom of Bahrain - http://www.bfharbour.com/mediacentre/video.htm - and Tunisia and Energy Cities in Qatar, Libya and India.
GFH's ordinary shares are listed on the Bahrain Stock Exchange, the Kuwait Stock Exchange and the Dubai Financial Market. Since 2007, its GDRs have been listed on the London Stock Exchange.
GFH receiving the following awards Euromoney's Best Islamic Investment Bank 2005; Best Investment Bank 2005, 2006 and 2007 from Banker Middle East; and Deal of the Year 2008 from Banker Middle East.