The embattled retailer JJB Sports last night insisted that its plans for a £100m cash call were "back on track" after a weekend of turmoil thanks to lurid – and false – reports about its chairman's finances that swept through the City.
The cash call – suspended on Friday – could be relaunched as soon as today as the company's brokers worked furiously to shore up support, which was shaken by the rumours that began to spread on Thursday night as details of the cash call were being finalised.
They concerned allegations of illicit payments to JJB's executive chairman, Sir David Jones, from a business associate, understood to be Jayne Sharpe, daughter of the Wigan Athletic owner and former JJB chief executive David Whelan.
The malicious gossip - proved to be false after Sir David submitted his bank statements to the law firm Herbert Smith and the company's directors – caused some fund managers who were preparing to back the cash call to get cold feet.
They are understood to have been contacted on Friday and told to watch for a scandal breaking over the weekend.
JJB will this morning submit a dossier on what it has learnt of the way they were spread to the Financial Services Authority. The City watchdog said yesterday that it would look carefully at the content, although it had not received anything by yesterday evening. It could launch a full-scale investigation into what JJB argues is "a clear case of market abuse".
Sir David, who suffers from Parkinson's disease, yesterday said his determination to see through the cash raising and turnaround plan for JJB had been redoubled.
He said: "This has been a deeply disturbing couple of days for all of us. The only important thing, though, is JJB and its future success. I am glad we have exposed this lie for what it is, and that our plan to rejuvenate the business is back on track."
The company's senior independent director, John Clare, and the rest of the board have reiterated their support for Sir David. They were said to have been "disturbed" by the nature and the timing of the rumours and the way they were disseminated around the City.
Controversy has swirled around Sir David, an acknowledged turn-around specialist who returned to the company to successfully save JJB from what looked like a near certain collapse, since July. Then, news of a £1.5m loan from bitter rival Mike Ashley, the owner of Sports Direct, broke.
The loan, which dated from before the time when Sir David rejoined, was repaid and the JJB board gave him their backing. However it precipitated angry exchanges between the two.
The capital raising is nearly twice what had been expected, and has been seen as a sign that the City is backing Sir David's turnaround plan. JJB's largest shareholders, Harris Associates and Crystal Amber, are thought to have subscribed their full allocation of shares.
JJB closed on Friday at 32.75p, but the new shares are expected to be priced at around 25p – a deep discount. JJB's total market value is only around £80m.
The company has been crippled by difficulties in keeping an adequate level of goods in its stores as suppliers have fretted over its future and the fact that they have not been able to obtain credit insurance against a collapse.
Sir David wants to shift the focus of the company away from replica football shirts to selling sports equipment under the slogan "serious about sports".
The chain will not be fully stocked until the first quarter of the new year because of the time taken to get new product in.
Steve Johnson, former chief executive of the collapsed retailer Woolworths, is on a shortlist of candidates to fill the vacant position of chief executive, although he is just one of up to 10 names that the company is considering for the role. An announcement on who has been selected is not expected to be made for some months.Reuse content