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JJB Sports (LSE:JJB) announced on Thursday, 5th April that they had secured a £30 million “strategic investment package” from a number of the company’s shareholders and from the US-based sporting goods retailer Dick’s Sporting Goods.
Shares of the UK-based sports retailer inched 6.2% higher from yesterday’s close to 17.25 pence a share in early trading following the report, even as the company likewise declared a loss £103.5 million before exceptional items for the full year ending in 29th January 2012.
The Package
Under the said contract, Dick’s Sporting Goods, a listed company on the New York Stock Exchange, will purchase £18.75 million worth of junior secured convertible notes and £1.25 million in ordinary shares of JJB Sports.
Dick’s will also have an option to purchase a further £20 million in junior secured convertible notes in a follow on financing in the first quarter of 2013.
Meanwhile, existing shareholders of JJB, including IAML, Harris Associates, Crystal Amber, and BMGFT will invest £10 million by exercising their warrants and subscribing for new ordinary shares.
“This is an exciting strategic investment that provides us with a valuable introduction into the workings of the United Kingdom sporting goods market from an established company that shares our commitment to serving the needs of core athletes,” Edward Stack, Chairman and Chief Executive Officer of Dick’s Sporting Goods said in a statement.
“By partnering with JJB, we will be positioned to share our more than 60 years of operating experience in the United States while gaining insight into the specific needs of U.K. athletes, which will serve as a stepping stone for our company’s future growth and development.”
JJB Sports has been making losses since 2008 and currently has a debt of £20.6 million, and a continued dropped in sales.
“We have always said that the turnaround of JJB was never going to be easy or quick, and the current retail environment has made our work even more difficult,” commented JJB SportsChief Executive Officer Keith Jones.
JJB also received a commitment from the Adidas Group to invest £15 million in a two-stage loan and an extension of the company’s credit facility until May 2015.
CEO Comments
CEO Jones commented on the development at length, saying:
“We believe this investment package and strategic alliance with Dick’s will provide a real opportunity to accelerate JJB’s turnaround. Dick’s is a premier sporting goods retailer and we look forward to working with them. We are also extremely grateful to our key stakeholders for their continued support and the Bank of Scotland for the confidence they have demonstrated in the long-term future of our Company.”
Company Spotlight
JJB Sports is a UK-based sporting goods retailer, including clothing, footwear, equipment, and accessories for men, women, and children.
References
↑ Company overview
↑ Dick’s Sporting Goods Announces Strategic Investment in JJB Sports plc
↑ JJB Sport Press Release
↑ Company Overview
