Leeds United: Cellino brokers ‘truce’ with former owners GFH

Massimo Cellino.
Massimo Cellino.
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MASSIMO Cellino said today he had negotiated a truce with Leeds United’s former Gulf owners which he hopes will ensure that the club isn’t “hurt any more.”

Four weeks ago, Cellino was talking about waging war with Gulf Finance House, the ex-owner of United and an existing minority shareholder at Elland Road.

He blamed the Bahraini bank for delaying his planned re-purchase of United’s Elland Road stadium and spoke of driving GFH out of the club, implying that their relationship had gone beyond the point of repair. “I can’t take any more of it,” he said. “There’s no respect for me.”

In August, Cellino believed that he and GFH had effectively shaken hands on a deal to revise the Share Purchase Agreement (SPA) they signed when he bought 75 per cent of Leeds in April. The arrangement was supposed to significantly reduce the debt of £24m owed by the Italian to GFH but at the beginning of November, it remained unsigned. A statement issued by GFH at the time gave the impression that the bank had no intention of accepting it.

Last weekend, however, Cellino flew out to Bahrain to speak again with senior officials from the bank. He has consistently argued that Leeds would be paralysed and financial weak for as long as the original SPA remained in place. According to him, by the time he travelled back to England on Monday evening another deal was finalised and officially in place.

“I’m very happy because we’ve fixed the club forever,” he said. “When we bought the club, we left 25 per cent (of shares in Leeds) with GFH. We had some problems, we started arguing but I went to Bahrain on Sunday and fixed everything.

“GFH showed me that they are happy to keep their 25 per cent. They show me that they want to act as a partner and fund the club to the same percentage as our 75 per cent. They trust me, they’ve put fresh money in and they’ve cleaned up something that wasn’t very clear.”

The specifics of the agreement are not entirely clear but Cellino claims that between them, he and GFH will inject £23.5million of capital into a club who still have high costs and numerous liabilities. A total of £5m will come from the bank, despite its apparent reluctance to spend money on Leeds during Cellino’s protracted takeover or at any stage since then. It continues to manage a 25 per cent stake in the club.

Cellino also says that the revised SPA will change the schedule of debt payments owed to GFH and he expects to see it formally approved at a club board meeting on Tuesday. Aside from anything else, it removes the obstacle blamed by him for his failure to deliver on a promise to buy back Elland Road last month.

“It’s agreed, it’s signed and it’s been paid too,” Cellino said.

“When I said last time that it was fixed, we found other problems. Then we thought it was fixed again and we found other problems. It’s been really difficult but now I’m sure that this club won’t be hurt any more. It’s very strong. It can face its debt.

“Next Tuesday this club will have a board meeting to approve the balance sheet. The club lost £20m last year (the 2013-14 financial year) but be we are raising capital of £23.5m.

“I found new friends and we are real partners now. They have 25 per cent of the club, they give me all the power to run the club and to be the nominated director - full power to clean everything but they’ll support the club financially. They are happy and I’m happy to make them worth the percentage of their shares.”

Precisely why this sudden understanding came about is not known. As a recently as month ago, with Cellino and GFH at odds, the bank refuted his suggestion that it was preventing the £16m repurchase of Elland Road.

GFH said it had “agreed to the sale of Ross McCormack (to Fulham in July) on that basis that Mr Cellino would proceed with buying the stadium. GFH is surprised that this has yet to happen.”

The bank was asked to comment on Cellino’s latest comments and explain the terms of any fresh agreement between them. It is yet to respond.

At present GFH has two members on the board at Elland Road. Its head of investment management, Salem Patel, has been a Leeds director since December 2012 and Jinesh Patel - chief executive of GFH’s Dubai-based private equity firm, GFH Capital - joined the board in July.

The original SPA accepted by Cellino in February gave the bank an astonishing amount of power in its capacity as minority shareholder. Legal experts say the document was weighted heavily in GFH’s favour. It gave it the right to veto major operational decisions - player transfers excepted - by requiring 85 per cent of shareholders to back them and also allowed the bank to repurchase the 75 per cent stake held by Cellino’s company, Eleonora Sport Ltd, for just £1 if the Italian failed to meet any of his financial obligations.

That news of a revised SPA materialise in the same 24 hours as the Football League moved to ban Cellino from owning Leeds is intriguing to say the least. Cellino claims he was unaware of the League’s intentions until his Italian lawyer informed him of the development around lunchtime on Monday. He plans to appeal and is threatening to sue the League if it attempts to enforce a disqualification which is due to run until March 18, 2015.

“The only person I worry about is God,” Cellino said. “This (the deal with GFH) was a big goal for Leeds and I’m sorry that some beautiful news has been spoiled by the League.

“I don’t blame the League or even my colleagues who are on the League’s board. What can they do? They are following their lawyers. But I’ve been working to find a way to help this club run with no financial problems. We found a way and now I have partners who put money in and will fix the problems with me.”