JJB Sports put up for sale
Struggling sportswear retailer JJB Sports has put itself up for sale after admitting that it is unlikely to raise the funds needed to turnaround the business. The company has also warned investors that their shares may be worthless.
JJB said in a statement issued today: “The company has continued its discussions with its strategic partners regarding a further capital raising and restructuring of its store portfolio to facilitate the turnaround of the group’s trading performance.
“However, following these discussions, the directors do not believe that the company will be able to raise the level of funds required to implement the turnaround.
“As a result, the board has decided to conduct a formal sale process of the company and now wishes to invite offers to support further investment in the company, which may result in a sale of the company or its assets.”
JJB, which operates 180 stores and employs 4,000 staff, has struggled for some time with funding problems and falling sales as it faces stiff competition from other retailers.
The company was given a lifeline in April when it received a £20 million investment from US retailer Dick’s Sporting Goods and £10 million from existing shareholders. However, its bank debt now stands at £16.5 million and the company also has £18.75 million in convertible loan notes and has drawn down £1.1 million of another loan facility.
In addition to the funding issues, JJB also said that organic sales fell 3.3% in the six weeks to 26 August.
“Given the level of current debt within the company, there can be no assurance that any proposal or offer that may be made would attribute value to the ordinary shares of the company,” said JJB.
