Leeds United: Sport Capital sues GFH for £33m over failed Leeds takeover bid

21st December 2012. GFH capital announced as the new owners of Leeds United Football Club. Pictured new directors Salem Patel and David Haigh.
21st December 2012. GFH capital announced as the new owners of Leeds United Football Club. Pictured new directors Salem Patel and David Haigh.
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Sport Capital, the BVI-based company which failed with a bid to buy Leeds United last year, has launched a £33m claim for damages against Gulf Finance House over the collapse of its deal.

Sport Capital claims GFH and the bank’s private equity arm, GFH Capital, breached the terms of a Share Purchase Agreement (SPA) reached between them, causing the proposed takeover to fail.

The Sport Capital group - a consortium featuring ex-Leeds managing director David Haigh and Andrew Flowers, MD of United shirt sponsor Enterprise Insurance - spent almost three months attempting to push the buy-out through but saw the deal fall apart in January 2014.

The failure of that bid cleared the way for current owner Massimo Cellino to agree the purchase a 75 per cent stake in Leeds in early February.

GFH, which took control of United in 2012 after securing a 100 per cent stake from Ken Bates, retained control of a 25 per cent share after Cellino’s takeover and is still a minority shareholder at Elland Road

Sport Capital accuses GFH of breaking the terms of the SPA by negotiating the sale of United to Cellino and the Italian’s UK firm, Eleonora Sport Limited.

In a statement issued today, Sport Capital also claims that GFH attempted to sell the Yorkshire club to Khaled Al-Baltan, who was president of Al Shabab football club in Saudi Arabia.

The action is being taken by Sport Capital Limited, a company based in the British Virgin Islands. The firm is understood to be controlled by Haigh.

Flowers and Haigh, who has been under arrest in Dubai since May of last year over allegations of financial wrongdoing made against him by GFH, were the two public faces of the doomed Sport Capital offer.

Today’s statement said Cellino was also involved with that bid, along with Terry Riley, the owner of the Ascot Property Group.

Sport Capital’s statement read: “The SPA provided for Sport Capital to fund the working capital of the club throughout the term of the SPA, which they did.

“The SPA also specifically prevented GFH from entering any negotiations or discussions with any other parties regarding the sale of Leeds United shares.

“The legal action against GFH states that the exclusivity of the SPA was breached by GFH which continued to pursue the sale of Leeds United to third parties including Mr Khaled Al-Baltan, then the president of the Al Shabab Football Club in Saudi Arabia.

“It further claims that GFH’s separate negotiations with Massimo Cellino and Eleanora Sport Ltd were in breach of the agreement.”

Flowers denied any involvement in the legal claim, telling the YEP: “The Sport Capital claim is absolutely nothing to do with me. I’m not involved at all.

“Any control I had of the company went back to David Haigh after the takeover ended. I believe it’s 100 per cent owned by him.”

Sport Capital’s £33m claim has been lodged with the High Court in London and a spokesman said the firm was seeking to have GFH Capital’s English assets frozen.

“We expect GFH to attempt to evade service of the claim from their Dubai HQ which will mean ultimately we have to serve this claim on them through diplomatic channels,” a spokesman said.

“Our contention is that the actions of GFH and specifically of (GFH chief executive) Hisham Alrayes delayed and then destroyed the Sport Capital deal.

“This was a deal which would have ensured a sustainable and successful future for the club and that included the almost immediate purchase of Elland Road, the terms of which had been agreed.”

The court claim the latest in a long line of exchanges involving Haigh and GFH, exchanges which followed the bitter end of the Bahraini bank’s time as owner of United.

Haigh was imprisoned after GFH accused him of defrauding the bank of around £3m during his time as deputy CEO of GFH Capital.

The 37-year-old quit that post in February of last year but was arrested at GFH Capital’s offices three months later after flying to Dubai to discuss a job offer from the firm. He denies all allegations against him.

Haigh was a director of Leeds for the duration of GFH’s time as owner, taking on the role of managing director in July 2013, but he quit that post shortly after Cellino’s takeover following an admission from the Italian that he intended to sack him.

GFH responded by saying: “The latest press release issued by Sport Capital looks like an attempt to divert attention from the allegations against Mr Haigh which are being heard in the Dubai courts.

“He and Sport Capital appear to have commenced cases in London although we have not been served with any papers.

“As Mr Haigh is facing criminal and civil proceedings in Dubai we do not want to say anything which would jeapordise any proceedings.

“We will be happy to comment further when we are able to do so, but until then we think that the courts, not the media, are where disputes should be resolved.”

Shortly after Sport Capital’s takeover collapsed, Haigh was quoted as saying: “As fans know, we signed a share acquisition agreement with GFH Capital at the end of last year.

“Sadly, some of the consortium’s backers ultimately didn’t feel able to deliver the backing we had hoped was agreed to take the club forward.

“I have met many, many potential investors over the past year and, sadly, while many are keen to talk the talk, they have been unable or unwilling to deliver in financial terms.

“Nevertheless, these talks continue with a number of parties to seek the best possible outcome for Leeds United.”

Defiant Leeds United head coach Paul Heckingbottom during the match between Leeds United v Bristol City, at Elland Road. PIC: James Hardisty

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