Retail focus: JJB could tap up investors for more cash; Ronnie returns’ VAT goes up
Retail round-up: JJB to tap up investors for further funds
JJB SPORTS could tap up investors for a further £50m on top of the £31.5m it is seeking via a share placing announced just before Christmas.
The Sunday Times reported that the cash-strapped Wigan company could seek up to £50m from investors to help fund a new three-year business plan.
On Christmas Eve, the firm announced that it was planning a £31.5m fundraising which could give the company’s five biggest shareholders – fund manager Crystal Amber, Invesco Perpetual, the Bill & Melinda Gates Foundation and GoldenPeaks Capital – a combined stake of between 58% and 71.7% of the business.
JJB has also brought in turnaround specialist Mike McTighe, who was previously chief executive of Cable & Wireless and is chairman of television set-top box maker Pace, as its new chairman.
The money is being sought in order to prevent a breach of its £25m loan from Bank of Scotland and is the second attempt to gain support from investors in just over a year, following a £100m placing and rights issue in October 2009.
Prior to Christmas, the company’s net debt stood at around £21.4m and it warned that its ability to operate within its current facility depended on trading conditions over the Christmas and New Year period.
Meanwhile, former JJB chief executive Chris Ronnie has set up a new company called Premier Sports Retail which will look to buy footwear or clothing stores.
Mr Ronnie has teamed up with brothers Neil and Andrew Duckworth, owners of Darwen-based asset valuation firm Winterhill Asset Management, to launch the business.
The Duckworths, who sold their Manchester-based asset valuation firm SHM Smith Hodgkinson to Chicago-based Gordon Brothers in 2004, are also founding partners in North West turnaround fund Eternitas alongside former Fairpoint chief executive Andrew Redmond.
Retail analysts are currently predicting a tough time for the sector after the Christmas trading period was hit by the bad weather and today’s introduction of a 2.5% increase in Value Added Tax.
Helen Dickinson and Tim Clifford, retail partners at KPMG, said: “The industry knows it is in for a tough year ahead. As well as the VAT rise, customers are tightening their belts because they’re worried about prospects for their own jobs and personal finances in what are likely to be tougher economic conditions in 2011.”
