JJB Sports is trying to curb another escalating crisis following the revelations that chairman Sir David Jones took a £1.5m loan from Sports Direct founder Mike Ashley.
The board said in a statement this morning that it still had unanimous support for Jones and that it was fully aware of the loan and had viewed the arrangement as a private one “not requiring public disclosure.”
It said the arrangement between Jones and Ashley was before Jones joined the board as a non-executive director and confirmed that it “has not and does not give rise to any conflict of interest.”
JJB Sports said Jones will now pay the loan back as quickly as possible to avoid further distraction.
Following the revelations, and confirmation that JJB Sports was considering a £50m capital raising, by way of placings and open offer, shares in the group plummeted more than 25 per cent.
One of JJB Sports’ biggest shareholders, David Herro, chief investment officer at Harris Associates, said that the information about the loan was leaked by those close to Ashley in an attempt to harm the bid to raise capital for JJB Sports’ continued turnaround.
Herro told the Telegraph: “The timing of the release of this information is a bit odd and appears to be a purposeful attempt to derail the potential capital raising.”
The loan was given to Jones to invest in Advanced Network Technologies, a software company owned by Jones and his family.
Ashurst law firm partner Richard Gubbins said: “You would have to question why a major competitor or even someone with a trading relationship would be willing to make a personal loan.”
He added that even if Jones had declared the loan it would still be “somewhat embarrasing” for the retail veteran.