Pannu was quoted as saying McLeish was asking for "a very large amount of money which I was not prepared to meet" and that he was "no Jose Mourinho".
However, Pannu has insisted the comments had not been meant as a criticism and that McLeish could sign a new contract as early as next week.
He told the Birmingham Mail: "This is all nonsense. We are just perhaps inches away from Alex signing a contract, possibly by next week.
"Our relationship is phenomenal, we are very strong and close, and I want to dispel this notion that there is anything wrong.
"In fact, I spoke to Alex about the Mourinho reference and we laughed about it. In the whole context of the interview I did, it would not have had a sting to it. But to take out the extract like that made it look worse than it was."
Source: PA
Source: PA