Gillespie demanded a transfer last week

Colchester United have smashed their transfer record by signing Steven Gillespie from Cheltenham Town for a fee in excess of �400,000.

The 23-year-old striker scored 16 goals for League One Cheltenham last season.

The Gloucestershire club accepted a second improved bid for the player after he handed in a transfer request last week.

Bristol City are entitled to 20% of the fee due to a sell-on clause from his move to Cheltenham in 2006.

"The fee is a significant improvement on previous offers and will enable us to reinvest in a replacement," chairman Paul Baker told the Robins website.

"Overall we are glad to have brought the matter to a close as the uncertainty was affecting Keith Downing's preparations."

Cheltenham may use the fee to bring Southend United striker Gary Hooper to Whaddon Road, although Downing says that is still some way off.

"We've spoken to Southend and the player but there are a couple of other clubs interested in him as well."

Gillespie has linked up with his new team-mates at a pre-season training camp in Loughborough.