JJB unveils £65m funding to turn around ailing chain
Wednesday 16 March 2011
JJB cleared another key hurdle in its battle for survival yesterday by unveiling a £65m fund-raising and a three-year working capital facility of £25m, although both are dependent on creditors voting through a critical insolvency procedure next week.
The troubled 246-store retailer also revealed that its sales, which have been in double-digit negative territory for months, would not return to growth until the third quarter of this financial year.
Combined with the working capital facility agreed with Bank of Scotland, Wigan-based JJB believes the £65m it plans to raise through a firm placing and open offer will be enough to safeguard its future and implement its turnaround plan. However, this could take up to five years. JJB plans to use both forms of funding to address its stock shortages, invest in its new store format, reduce warehouse costs and train staff.
JJB said its major shareholders, including the Bill & Melinda Gates Foundation, had agreed in principle to back the latest capital-raising, which will be subject to a general meeting on 22 April. Its shareholders backed an earlier £31.5m fund-raising in December. Mike McTighe, JJB's chairman, said: "We continue to engage with all of JJB's stakeholders, including landlords, shareholders, our lender, suppliers and our colleagues... We are continuing to build real momentum among this 'coalition of the willing'."
The sports equipment chain needs half of its external creditors and 75 per cent of all its unsecured creditors to vote in favour of its company voluntary arrangement on 22 March. JJB has proposed the CVA to shed up to 89 stores and slash its rent bill.
JJB said its like-for-like sales were down by 13.5 per cent from 24 January to 13 March. But it predicted a return to sales growth in the "mid-teens" in its third quarter.
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