2nd UPDATE: JJB Sports Equity Issue To Proceed Imminently
October 12 2009 - 11:18AM
Dow Jones News
Struggling U.K. sportswear retailer JJB Sports PLC (JJB.LN) will
launch its GBP100 million equity issue imminently, its largest
shareholder said Monday, after the plans were delayed by an
apparent smear campaign aimed at derailing the cash call.
Richard Bernstein, fund manager at activist investment fund
Crystal Amber Fund Ltd. (CRS.LN) which has a 14% stake in JJB,
said: "I think it's just a case of re-confirming all those who were
due to subscribe as soon as possible. It shouldn't be too
long."
The cash call had initially been delayed by a technical matter
Thursday, but on Saturday JJB issued another statement to say it
was holding back the fundraising round to investigate rumors about
the financial affairs of its executive chairman and interim Chief
Executive David Jones.
According to the Sunday Times Newspaper, the allegations
centered on suggestions that the daughter of former JJB Sports
Chief Executive Dave Whelan had made payments to Jones' bank
account at the time when Whelan was in talks to buy JJB's Health
Clubs division.
A JJB Sports spokesman Monday said Jones wouldn't be commenting
on the claims.
JJB said the rumors were "totally unfounded" and it is "very
concerned" by their timing and nature. It has passed details of its
investigation to the relevant regulatory authorities.
Bernstein said: "We don't know where the rumors started. We got
a call on Friday saying the placing wasn't going to be done, but it
was the lesser of the evils. What we don't want is someone joining
as a shareholder and then saying they wouldn't have got involved if
things had turned out differently."
It is the latest twist in the tale of the Wigan, England-based
retailer, which last month posted a massive first-half pretax loss
of GBP42.8 million and was recently revealed, along with
high-street rival Sports Direct (SPD.LN), as the subject of a U.K.
Serious Fraud Office probe on alleged price-fixing.
Earlier this year, Jones faced a showdown with shareholders
after it emerged he took a loan from business rival Mike Ashley,
owner of Sports Direct.
JJB announced at the time of its interim results in September
that it had begun the process of looking for a full-time chief
executive, following the dismissal in January of former CEO Chris
Ronnie over a messy share transfer.
Ronnie was suspended when it was discovered that liquidators of
collapsed Icelandic bank Kaupthing Bank had seized his 27.5% stake
in JJB. He resigned a short while later.
A JJB spokesman Monday wouldn't comment on claims that Steve
Johnson, who was at the helm of retail stalwart Woolworths when it
collapsed at the start of the year, is one of two names in the
frame as Ronnie's successor.
Last month, Jones told Dow Jones Newswires a permanent
replacement was expected to be announced by the end of January.
JJB's board said it continues to fully support Jones, who
resurrected fashion chain Next (NXT.LN) in the 1980s.
Seymour Pierce analyst Kate Heseltine downgraded JJB to a "sell"
rating from "hold" Monday and in a note to clients said the
fundraising amount is "excessive in light of the limited progress
made with the turnaround plan."
She expects the firm will launch a placing and open offer,
priced in the region of 20 pence to 25 pence.
JJB said it has received indications of interest from investors
in excess of three times the size of the proposed capital
raising.
Company Web site: www.jjbsports.com
-By Hannah Benjamin, Dow Jones Newswires; 44-20-7842-9298;
hannah.benjamin@dowjones.com
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