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JJB to raise ‘sufficient working capital’
Struggling retailer gives details of £65m capital raising plan and £25m finance facility from lender BoS
JJB Sports has given details of a multimillion pound capital raising scheme that it said will ‘provide us with the working capital we believe we need to implement our revised business plan’.
JJB Sports aims to raise £65m before expenses by way of a firm placing, placing and open offer of shares, although this will only take place if its previously announced Company Voluntary Arrangement (CVA) is approved on March 22.
It said it has reached ‘agreement in principle’ with its major shareholders to participate in the proposed capital raising up to an aggregate amount of £65m. The shareholders include Harris Associates, Crystal Amber, Invesco Asset Management and the Bill & Melinda Gates Foundation Trust. Other existing shareholders will be invited to participate in a bookbuild, which is expected to be completed by April 4.
JJB Sports said it has also reached an agreement with Bank of Scotland (BoS), its lender, for a £25m committed working capital provision through to May 31, 2014, although this is also dependent on the CVA gaining approval and a successful capital raising.
Adidas Group and Nike, principal suppliers and strategic partners, are ‘strongly supportive of JJB Sports and its future plans’, the company added.
A JJB Sports statement read: “The revised business plan aims to re-establish and promote JJB as a trusted sports retail brand by improving its store portfolio and product proposition, continuing to develop its multi-channel offering and strengthening its people and service offering.
“The board is of the opinion that, subject to the successful implementation of the CVA proposals, the proposed £65m capital raising and provision of the £25m committed working capital facility by BoS would provide the company with sufficient working capital for its present requirements and enable it to implement the revised business plan.”
Mike McTighe, JJB Sports chairman, said: “The proposed £65m capital raising and the continuing support from our major shareholders and our lender, BoS, will provide us with the working capital we believe we need to implement our revised business plan.
“We continue to engage with all of JJB Sports’ stakeholders, including landlords, shareholders, our lender, suppliers and our colleagues. Today's announcement is the result of this ongoing dialogue and we are continuing to build real momentum among this 'coalition of the willing'.
"The next key stage in the process is the creditor and shareholder votes next week. The board remains confident of the success of this turnaround and the future prospects for the company."
Furthermore, JJB Sports has updated its current trading situation, and said for the period from January 24 to March 13, year-on-year revenue was down 13.5 per cent, with total group revenue down 14.6 per cent.
However, it said sales in its six already transformed stores were 16 per cent higher than the company average over the period November 1, 2010, when the last transformed store was opened, to March 13.
Transforming the rest of its store portfolio is a large part of JJB Sports’ revised business plan, starting with rightsizing as detailed in the CVA. It will then invest in each remaining store, improve its retail disciplines like stock selection and buying, source new ranges, offer new product and service propositions, focus on training and grow its number of online exclusives.
