The Yorkshire Post are claiming today that the talks on the possible takeover of Leeds United have reached a critical stage, and if it’s not done and dusted in the next 48 hours, the prospective buyers will walk away for good.
A source has told the YEP that although the offer from the Middle East was “still there”, the prospective new owners appear to be losing patience after failing to force the hand of current owner Ken Bates. Although the buyers have completed the due diligence process of going through the club’s books, the final sticking point is Bates’ refusal to sign an ‘indemnity clause’.
An indemnity clause is a standard feature of most deals involving the sale of a business, and it’s purpose is to protect the buyers from any unforeseen liabilities that may come to light in the future. This issue seemed to have caused the to collapse four weeks ago before a flurry of negotiations revived the process, but this time the middle eastern group are believed to be prepared to back out of the deal for good if nothing is settled.
The bid has been led by GFH Capital, a private equity firm in Dubai, and two members of the company’s senior management team attended United’s Championship game against Wolverhampton Wanderers on August 18. One of them was Leeds fan and GFH deputy chief executive David Haigh, who is believed to have been line up as the club’s new chairman if the deal goes through.
The YEP also has “firm indications” that a member of Bahrain’s ruling family, Sheikh Abdulrahman bin Mubarak Al-Khalifa, is also backing the takeover. The paper has get to get any official comment from the bidders as to their current intentions, as they are still abiding by the confidentiality clause they agreed with Bates at the start of the process. But a source close to the club told the YEP “The deal’s still there to be done but it’s going to need movement on both sides”, and that talks will continue for the next 48 hours.
We can but hope that all of this is just brinkmanship by both sides, as they try to end up with the best possible deal, but it’s possible that Bates will refuse to sign the Indemnity clause to the bitter end, as perhaps there is something lurking within the complex web of companies which he uses to control the club.
The amount on offer is £40 million, which seems a very reasonable sum given the current status of the club, and the most recent accounts showed that without new investment the club is going to run into a cashflow crisis, due to overspending on the various property schemes going on around the stadium.
Despite all the usual bluster in his programme notes on Saturday Bates will know this better than anybody else, and he will also know that if we’re forced into a second administration he will be out of football for good under the Football League’s ‘fit and proper persons test’. So we can but hope he’ll be forced to come to his senses at the eleventh hour and sign the bloody deal!