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JJB Sports has evidence of ‘pernicious’ allegations against chairman
October 11, 2009 By Leave a Comment
JJB Sports is to provide a dossier to the City watchdog detailing “pernicious” allegations made against chairman Sir David Jones.Photograph Newscast
JJB will tomorrow hand a dossier over to the Financial Services Authority detailing “pernicious” allegations made against chairman Sir David Jones which the sportswear chain claims amounts to “market abuse” designed to wreck its £100m rights issue.
The City watchdog is expected to launch an investigation to find out who planted the false rumours, which as well as Jones, also target David Whelan, chairman of Wigan Athletic football club and the former chief executive of JJB, and his daughter Jayne Sharpe.
The sports retailer was forced to pull the rights issue on Friday as rumours circulated on the financial markets and John Clare, its senior independent director, was called in to investigate them. JJB which plans to go ahead with its rights issue this week, says the claims are false and without foundation.
The dossier handed to the FSA includes forged bank statements which were given to two national newspapers on Friday, the day the retailer had planned to launch its rights issue. Investors in JJB were called that morning by unnamed parties and warned against taking part in the issue claiming damaging revelations about Jones were due to be published over the weekend. That afternoon Jones’s personal accountant gave the retailer’s board and its lawyers, Herbert Smith, his bank statement to show that the documents alleging improper payments provided to the newspapers were forged. The FSA declined to comment this weekend.
Jones, who this summer was at the centre of a scandal over a £1.5m loan from rival boss of Sports Direct, Mike Ashley, was said to be “deeply shocked and speechless with rage” this weekend which he spent at his holiday home in Spain. It is understood that the intention behind the allegations about the financial affairs of Jones was to smear his reputation and wreck JJB’s rights issue.
In a statement to be released to the stock market tomorrow , JJB reiterated its support for Jones: “During the course of Friday morning, the company was made aware of rumours that were circulating in the press and financial markets in relation to Sir David Jones’s personal financial affairs and decided to delay the proposed capital raising until it had the opportunity to further investigate these rumours.”
It added: “The board has now concluded its investigation and found these rumours to be totally unfounded … The Board is very concerned by the timing and concerted nature of these rumours and has passed on full details, with the results of its investigation, to the relevant regulatory authorities. The Board remains fully supportive of Sir David Jones and committed to proceeding with a capital raising.” It also emerged this weekend that Steve Johnson, who was chief executive of collapsed high street chain Woolworths, is on the short list of candidates to fill the vacant position of chief executive of JJB. Johnson is said to be one up to ten names on the list. An announcement on who has been selected is not expected for several months, clouding the sports retail sector in the UK. The sector is characterised by shifting alliances, shared interests and almighty bust-ups when big egos fall out.
Jones became executive chairman of JJB in January when chief executive Chris Ronnie was sacked. Jones, who turned around retailer Next in the 1990s was tasked with sorting out JJB. But Jones was roundly criticised this summer when it emerged that he had borrowed £1.5m from Newcastle Football club owner Mike Ashley, who owns Sports Direct, a big rival of JJB. Sports Direct also owns brands such as Slazenger tennis balls which are stocked in JJB shops. Ashley disputes Jones’s claim that the loan was initiated before he joined the board of JJB in late 2007.
When details of the loan were leaked to the media, Jones paid the money back in three days. Sources close to JJB said that the rest of the board was entirely satisfied that Jones paid the money back using legitimate sources, but said how he did so was his “private business”.
JJB Sports to launch £100m share offer
October 9, 2009 By Leave a Comment
JJB, which reported first-half losses of £42m, narrowly avoided going into administration in April this year. Photograph: Newscast
Struggling sportswear chain JJB Sports will tomorrow unveil a plan to raise £100m in an attempt to rebuild the business, which narrowly avoided collapse this year.
In an announcement to the stock exchange tomorrow, JJB is expected to detail a share placing and open offer, with the shares priced at less than 25p – a substantial discount to tonight’s closing price of 34.5p.
The scale of the fundraising is more than double the current stockmarket value of JJB, which has crashed over the past two years as the company has seen its sales fall off a cliff, its profits wiped out and has almost been engulfed by debt.
The fundraising is understood to be supported by JJB’s biggest shareholders, and other investors have made it clear they are keen to put in new money in the hope of a recovery.
JJB refused to comment on the move to raise fresh equity, but chairman Sir David Jones is likely to use the cash to revamp stores and rebuild stock levels. The fundraising is being underwritten by Panmure Gordon and Numis.
The share placing comes less than a month after JJB unveiled a huge leap in first-half losses from £15m to £42m. Like-for-like sales in August collapsed by nearly 40% as the retailer’s shelves stood empty as a result of suppliers being unwilling to risk doing business with a company that might not have been able to pay its bills.
As he unveiled the loss Jones revealed a plan to turn JJB back into a store aimed at “sports enthusiasts, runners and people who want to keep fit”. He said he wanted the retailer to occupy the same slot in the sports market as Next does in fashion and did not want to be a discounter, competing head-to-head with Mike Ashley’s Sports Direct chain.
Jones, who used to run Next, has had a tumultuous time at JJB since he took over in January to try to rescue the Wigan-based business.
Within days he suspended the chief executive, Chris Ronnie, when it emerged that the 29% stake Ronnie had bought with Icelandic backers had been seized by administrators to the collapsed Kaupthing bank. Ronnie, a former lieutenant of Ashley, was later fired without compensation.
In April JJB narrowly avoided going into administration. The retailer, and the jobs of its 12,000 employees, were saved only when a rare company voluntary arrangement was agreed with its landlords.
To add to the problems, Jones was caught up in a personal battle with Ashley when it emerged that the JJB boss had accepted a £1.5m personal loan from Ashley.
Last month the hostilities between the two businesses took a new twist when the Office of Fair Trading and Serious Fraud Office revealed that they were investigating alleged fraud and price fixing at JJB and Sports Direct. The watchdogs were alerted when JJB blew the whistle on its rival in return for immunity. The period being investigated coincides with the time Ronnie was at JJB.
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