The troubled sportswear retailer JJB yesterday came out strongly in support of Sir David Jones, its executive chairman, over a controversial £1.5m personal loan he received from Mike Ashley, the founder of the rival chain Sports Direct.
JJB said its executive directors and advisers were made aware of the loan earlier this year and viewed the arrangement as a private one concerning Mr Ashley and Sir David that did not require public disclosure. It added that the loan, which was initiated before Sir David joined JJB as a non-executive director, has not given and does not give rise to a conflict of interest.
Details of the loan emerged over the weekend and a series of claims and counter-claims ensued. The row overshadowed JJB's confirmation on Monday that it was planning a capital raising of at least £50m to fund its turnaround strategy.
Yesterday, David Herro, the chief investment officer at Harris Associates, which owns 12.8 per cent of JJB, was reported to have said that the disclosure about the delay in Sir David paying back the loan was leaked to "derail" the fundraising.
JJB came close to collapsing earlier this year, but sold its fitness club business to the group's founder, Dave Whelan, for £83.4m and completed a company voluntary arrangement enabling it to close 140 shops and refinance its debts.
In a statement, JJB said: "The board expresses its unanimous support for Sir David and takes the opportunity to thank him for leading the company through the successful disposal of the group fitness clubs business, the CVA process and a bank refinancing in his first six months as executive chairman."
Sir David told Mr Ashley that the loan made in October 2007 was to invest in a software company, Advanced Network Technologies, at which he is chairman and his son is a non-executive director. However, the loan has been embarrassing for Sir David, who helped to turn around the fashion chain Next in the 1990s.Reuse content