JJB Sports, the troubled sports chain, this morning secured a £3.4 million cash injection by issuing shares worth 5 per cent of the company to Mike Ashley’s Sports Direct.
The placing, 11.9 million shares at 28.5p, raises Sports Direct’s stake in JJB to 21 per cent. JJB shares rose 14 per cent to 37.25p in early trading this morning.
Chris Ronnie, the chief executive of JJB Sports, who worked for Mr Ashley at Sports Direct for three years until 2006, said: "Sports Direct approached us with an offer to participate in a placing of new shares. After due consideration, the board and I deemed the offer to be attractive for both parties."
JJB Sports has taken a pummelling on the markets after it revealed it had been accused of breaching its banking covenants last month, prompting auditors to warn of uncertainty over the company’s future. It has lost a two-thirds of its market value since the announcement, on September 26.
Fears over the sports retailer’s future have been heightened by the collapse of Iceland’s banking system. Exista, the Icelandic investment group, own 29 per cent of the shares with Mr Ronnie.
It was also reported that landlords who were owed rent had sent bailiffs to JJB Sports stores. Earlier this year it announced it was to close 72 stores, with the loss of 800 jobs.
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