JJB Sports is asking its shareholders for an additional £65m to support its survival plans.
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The ailing sportswear chain said it is in “constructive discussions” with its major shareholders. JJB Sports chief executive Keith Jones visited the US two weeks ago to rally support from its biggest shareholder Harris Associates as well as the Bill and Melinda Gates Foundation.
The rights issue, which is vital to JJB’s revival plan, will be the retailer’s second this year following a £31.5m cash injection from shareholders last month.
JJB’s survival also hinges on the retailer securing a CVA. It plans to shed 43 stores by April 2012 and is reviewing the future of a further 46 stores which it will decide whether to close over the next two years. Creditors will vote on the CVA at a meeting on March 22.
Rival retailer JD Sports Fashion pulled out of takeover talks with JJB last week based on a “detailed assessment” of information in the public domain about its CVA proposal. JD Sports claimed JJB did not reveal key information about the business despite repeated requests.
JJB is expected to unveil its new business plan tomorrow, which will reveal that it plans to move away from discounting in a bid to cement itself as a mid-market sports specialist. It will also give its directors shares in the company to incentivise its management team during the turnaround.