Guardian Unlimited Football | News | Sainsbury pulls back from Leeds deal
Matt Scott
Friday January 14, 2005
The Guardian
Leeds United appeared to lurch towards administration last night as it emerged that key backers for Sebastien Sainsbury's takeover approach had withdrawn their funding.
Sources close to the deal state that final due diligence threw up previously unknown liabilities which are set to cost the club £10m between now and April. Among these are thought to be imminent obligations including tax and PAYE payments totalling £2.5m.
"Upon completion of due diligence by our potential funders, the true scale of Leeds United's debt and liabilities have become clear," said Sainsbury last night. "It was obviously more than we, they, and many others had envisaged."
Sainsbury is desperately attempting to construct a new proposal with secondary funders who had been informed of their position as a contingency in the event of a collapse of the first bid. It is understood these backers, whose identity is unknown, have so far pledged to continue the takeover and it is anticipated that £2.5m can be drafted into a lawyer's account within five working days.
If the second funders pursue their interest in the bid and Leeds find the approach acceptable, sources say the takeover could be completed within 10 days.
A third bid, from the local businessman Norman Stubbs, is now in the balance. It is understood that Stubbs has recognised his £8m of funding to be insufficient to mount an independent takeover and he is willing to pledge it towards a successful bid.
"We do have a possible contingency plan," said Sainsbury. "Over the next 24 hours we shall be considering our options. There's no way I want to see [Leeds] go into administration, but should that happen I will not try to rescue it."
Leeds's chairman Gerald Krasner was unavailable for comment last night. It is understood that Sainsbury's £25m approach was the only offer to satisfy the £4m in directors' loans, however the club's board is understood to be considering alternative proposals.
One is believed to be headed by the Freeserve founder Peter Wilkinson, however this bid would require first that Leeds file for administration. That would incur the Championship club a 10-point penalty, putting them fourth-bottom, level on points with Gillingham in the relegation zone.
Matt Scott
Friday January 14, 2005
The Guardian
Leeds United appeared to lurch towards administration last night as it emerged that key backers for Sebastien Sainsbury's takeover approach had withdrawn their funding.
Sources close to the deal state that final due diligence threw up previously unknown liabilities which are set to cost the club £10m between now and April. Among these are thought to be imminent obligations including tax and PAYE payments totalling £2.5m.
"Upon completion of due diligence by our potential funders, the true scale of Leeds United's debt and liabilities have become clear," said Sainsbury last night. "It was obviously more than we, they, and many others had envisaged."
Sainsbury is desperately attempting to construct a new proposal with secondary funders who had been informed of their position as a contingency in the event of a collapse of the first bid. It is understood these backers, whose identity is unknown, have so far pledged to continue the takeover and it is anticipated that £2.5m can be drafted into a lawyer's account within five working days.
If the second funders pursue their interest in the bid and Leeds find the approach acceptable, sources say the takeover could be completed within 10 days.
A third bid, from the local businessman Norman Stubbs, is now in the balance. It is understood that Stubbs has recognised his £8m of funding to be insufficient to mount an independent takeover and he is willing to pledge it towards a successful bid.
"We do have a possible contingency plan," said Sainsbury. "Over the next 24 hours we shall be considering our options. There's no way I want to see [Leeds] go into administration, but should that happen I will not try to rescue it."
Leeds's chairman Gerald Krasner was unavailable for comment last night. It is understood that Sainsbury's £25m approach was the only offer to satisfy the £4m in directors' loans, however the club's board is understood to be considering alternative proposals.
One is believed to be headed by the Freeserve founder Peter Wilkinson, however this bid would require first that Leeds file for administration. That would incur the Championship club a 10-point penalty, putting them fourth-bottom, level on points with Gillingham in the relegation zone.