British soccer club Leeds United said today talks with creditors had failed to meet a deadline and it may be forced to seek creditor protection if it cannot get an agreement, sending its shares down.
Leeds United says it has failed to agree a rescue with its lenders and continued failure might make it seek protection from creditors, sending its shares diving 29 per cent .
The loss-making club, once English champions but now at the bottom of the premier league and saddled with almost 80 million pounds in debt, said it was still in talks with its creditors.
But the failure to reach agreement with them by now meant that it would have to shelve plans for an injection of fresh equity.
Leeds shares were down 29 per cent at 2.5 pence at 1:23 p.m. valuing the club at under 10 million pounds.
"It has been decided not to go ahead with the planned subscription for shares and, contrary to expectations expressed in the preliminary statement, there will be no circular issued to shareholders," it said in a statement.
Under the plan, leading businessman Allan Leighton and private firm A.R.M. Holdings Group would have injected 4.4 million pounds into Leeds in return for shares in the club. Leighton is on the club's board and is also chairman of the Post Office.
The Yorkshire club has had a turbulent year and a half. Last month it reported record annual losses for an English premier club of just under 50 million pounds.
Leeds said it remained in talks with its creditors and proposed investors. An agreement with them would ensure funding for at least three months, giving it breathing space for a longer-term refinancing.
"But, if the negotiations referred to above are unsuccessful, the directors may be forced to seek the protection of an administration order," it said.
Leeds were English champions in 1992 and reached the European Champions League semi-finals in 2001.
On November 10, Leeds got rid of its first team manager, Peter Reid, after he failed to improve the club's standing in the league.
According to the Financial Times newspaper, Leeds recently appointed corporate financier Robin Binks, from auditors Deloitte & Touche to provide help on the restructuring.
D&T's Nick Dargan has acted as lead administrator in a number of high profile football club insolvencies, including Leicester City and Ipswich Town.
If the club does go into administration, its financial woes could have a direct impact on fortunes on the pitch.
If Leeds end the current season among the bottom three teams in the division they will fall out of the premier league and into division one.
Under new rules the club would be deducted 10 points if it was in administration and was in division one.
The Football League regulations came into force after a number of teams, including Leicester City, had similar problems.
The Premier League does not have the same rules.