Leeds United to seek £15m rescue refinancing

Leeds United, the crisis-hit Premiership football club, is seeking to raise up to £15m via a rescue refinancing in an attempt to cut debts and keep the club afloat.

Leeds said yesterday that it has brought in accountants from Ernst & Young to advise on fundraising options while a radical cost-cutting plan will see more staff go and budgets cut. More players sales are likely as the club wrestles with its £79m debt mountain.

The relegation-threatened club admitted that it was possible that it would be forced into administration, even if it manages to stay in the top flight. "It's possible but that's the last possible option," one source said.

The club also cleared away the last vestiges of former chairman Peter Ridsdale's regime yesterday, ousting the finance director Stephen Harrison. He will receive a £224,000 pay-off. In his place Leeds has brought in a corporate recovery specialist from Ernst & Young. Neil Robson, a Leeds-based accountant, has been seconded as interim finance director while a full-time replacement is sought.

John McKenzie, who replaced the unpopular Mr Ridsdale as chairman a month ago, will now become executive chairman and be virtually full time.

Leeds said it had identified further annual cost savings on top of the £3m announced last month. The savings will now run to £5m a year as the club cuts back office expenditure. It said the savings were necessary "to return [the club] to trading profitability as soon as possible".

The refinancing is expected to take two months to complete and raise between £5m and £15m. It could involve a rights issue, bond issue or a shift from short-term to long-term debt. It is a desperate last throw of the dice for a club which was in the semi-finals of the lucrative Champions League only three years ago but allowed spending to get out of hand. At one point 76 of its 250 staff had company cars.

Mr McKenzie said: "I will be taking full control of the club, at least the non-football part. Because of the outcome of the spending over a period of time there is a great deal to do. I'm sure this will be my last full-time job and I'm determined to try and sort things out.

"I care deeply about this football club and I believe I've got some of the skills which we need to get back on track. The administrative side does need sorting out and over the next few months I'll be giving up my other posts to concentrate fully on the job."

Leeds sources insisted that its management had made the decision to bring in Ernst & Young and had not been under any pressure from shareholders or lenders. The shares fell from 4.12p to 3.5p.

The Elland Road club remains in danger of relegation with two games remaining. With Sunderland and West Bromwich Albion already certain of the drop, West Ham, Bolton, Aston Villa, Fulham and Leeds are fighting to avoid the third relegation spot.

Separately, shares in Manchester United climbed 2p higher to 139p yesterday after it emerged that Jon de Mol, the creator of the television programme Big Brother, had increased his stake from 2.9 per cent to 3.48 per cent.