Major investors back JJB Sports’ cash call

Shares in JJB closed up 2.6 per cent last night after the group won the backing of its four biggest investors, which include the Bill and Melinda Gates Foundation, for the cash call.

The money will enable it to press on with the next stage of its restructuring plan.

The proposed share placing, which still needs the backing of a shareholder meeting later this month, comes a fortnight after landlords and other creditors backed an emergency rescue plan that will see JJB close 43 unprofitable stores, place a further 46 under review and move to monthly rental payments.

Last night the group’s shares closed up 0.75p at 29.25p.

More than 75 per cent of JJB’s creditors – the majority of whom are landlords – and over 50 per cent of shareholders approved the controversial company voluntary arrangement (CVA), an alternative to administration.

JJB, which currently has funds until the end of this month, has been boosted by a new £25m working capital facility with Bank of Scotland.

Chairman Mike McTighe said the fundraising will mark the end of the company’s financial restructuring process.

“After the approval of our CVA proposals by creditors and shareholders in March, I am delighted that we are today confirming the details of this capital raising with the support of our four largest shareholders.

“Once complete, it will allow the company to press on with the next stage of implementing its revised business plan and allow management to focus solely on the turnaround of the group’s retail business.”

The £65m cash call was dependent on the CVA being approved and comes two months after JJB raised £31.5m in a similar share placing.

Some of the additional cash will be used to roll out a new store format which is currently on offer at six stores.

The work, including new fixtures and fittings and a better store lay-out, will cost £6.1m in the current financial year and will target 22 stores.

A further 28 shops will be overhauled in the following year at a cost of £7.8m.

JJB said trading in the six transformed stores continued to outperform the remainder of the estate.

The new stores reported sales 16 per cent above the company average for the period between November 1 and April 3.

Across the entire estate, like-for-like sales were in line with recent trends with a drop of 13.6 per cent between March 14 and April 3.

JJB said trading and stock availability continued to be affected by financial constraints, but added that it continued to meet its “internal cash and trading expectations.”

Last month’s emergency rescue plan enabled JJB to avoid collapsing into administration for the second time in two years.

The restructuring means landlords will have to forfeit millions of pounds of rent.