JJB up after reports of financing deal

The market value of JJB Sports surged by more than half yesterday after the beleaguered sportswear chain said it was in talks with its bank and an unnamed "potential strategic partner" to raise additional financing.

The crisis-stricken retailer, which narrowly avoided administration in 2009 and last year, responded to a spike in its shares yesterday amid speculation it was in possible takeover talks. JJB said it had "held discussions with its lending bank and a number of potential strategic partners and investors about raising additional financing for the company".

The retailer added: "Constructive discussions continue with the company's lending bank and one of the potential strategic partners and have been widened to include other key stakeholders." This suggests the talks with a potential investor are advanced, if they have gone to shareholders about the negotiations.

JJB partly needs fresh funds for its store-refurbishment programme, which is progressing at a glacial pace, to drive its recovery. Its current talks over additional funds come despite JJB's battered shareholders ploughing £196m into the AIM-listed retailer via three fundraisings since October 2009.

While the potential investor in JJB was unclear last night, much speculation centred on JD Sports Fashion, which walked away from a possible takeover bid for JJB in March 2011. JD declined to comment last night.