Administration threat hangs over Leeds
Leeds United Football Club faces the very real danger of becoming the first ever Premiership side to go into administration, following an announcement made to the London Stock Exchange today.
Link: Leeds in need of urgent debt restructuring
In June the club released the worst-ever results for a UK football club with losses of £49.5m and debts of £80m.
Today it said negotiations to secure ‘first phase complex debt restructuring’ with principle creditors to provide it with working capital and give it time to implement a more permanent restructuring plan had failed to reach a satisfactory conclusion in time to issue a circular and obtain shareholder approval before Christmas.
As a result there will be no planned subscription for shares and no circular issued to shareholders.
Leeds said discussions would continue, but warned if the negotiations were unsuccessful, ‘the directors may be forced to seek the protection of an administration order’.
Last week Leeds hired Robin Binks, a corporate finance partner from Deloitte, to advise it on the restructuring of its £80m long-term debt.
The club is being run by Ernst & Young turnaround specialist Trevor Birch, who is chief executive.
Allan Leighton, chairman of the Royal Mail and head of BSkyB’s audit committee is deputy chairman at the club and has committed £2.2m of his own money with a further £2.2m pledged from ARM Holdings Group.