Questions about finance hang over planned Bahraini purchase of Leeds

Concerns have been raised about the funding for GFH Capital's proposed takeover of Leeds United. The Bahrain-based equity investor, whose parent company, the investment bank Gulf Finance House, has posted a series of troubled annual reports, has declined to say how it intends to finance the purchase of the club.

GFH "had accumulated losses of $300.69 million contractual obligations... and its current contractual obligations exceeded its liquid assets", according to a letter on May 14 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 plans to purchase Leeds with debt that could be put on the club's balance sheet, an approach used in several foreign takeovers.

Ken Bates, Leeds' chairman and majority shareholder, has been involved in discussions with the group since early in the year. GFH were granted exclusivity to pursue a takeover in June, and subsequently agreed a price for Bates' shares. A dispute over the terms of payment, however, has rumbled on since July.

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 the leased Elland Road.

When asked, GFH Capital confirmed it was not acting as a broker in the takeover, as has been suggested, but trying to buy the club itself.