This morning ailing retailer JJB Sports confirmed that it wants to raise £50m to fund its turnaround plans – either by flogging more assets, changing the terms of its loans or by selling extra shares. Meanwhile on the very same weekend, it suddenly emerged that JJB’s new chairman Sir David Jones borrowed £1.5m from Sports Direct boss Mike Ashley back in 2007, and still hasn’t paid it back. Since Ashley not only runs JJB’s biggest arch-rival but is also one of its biggest shareholders, this leaves Jones with an embarrassing conflict – and there’s even been some suggestion that he tried to sweep the whole thing under the carpet. If we didn’t know better, we might wonder if someone was deliberately trying to derail the fundraising…
The precise details of this row remain a bit hazy. Nobody seems to be denying that Sir David borrowed the money from Ashley (back in 2007, way before he took the JJB job), but it’s not entirely clear why, or what’s happened to it since. According to emails seen by the Times (which suggest they may have been leaked by someone with an axe to grind), Sports Direct seems to be implying that Jones was so keen to keep the loan out of the public eye (for fear of how it would look) that he asked them to hush it up – for example by painting it as a charitable donation. One such missive, from Sports Direct FD Bob Mellors, even claimed Jones had admitted he would have to resign if the news got out.
However, JJB has ‘emphatically’ denied that Jones asked anyone to lie (apparently JJB’s lawyers are writing firmly-worded letters to this effect even as we speak). It also claims that the board knew all about the loan, but didn’t report it to the stock market because it was a private arrangement between the two men. And it insists that Jones is going nowhere: ‘Sir David has no intention of leaving JJB until its turnaround is complete and the damage done by the previous management is set right,’ the Times was told. And to add to the intrigue, this is a reference to ex-boss Chris Ronnie, who was forced to resign last year – and who previously used to be Ashley’s right-hand man…
Whatever the rights and wrongs of this latest squabble, the loan is hugely embarrassing for Jones and JJB, as it tries to raise extra funds for its turnaround plan. The retailer only narrowly escaped administration earlier this year by renegotiating with its creditors and selling off its health clubs arm – and Sir David, the former Next boss who was parachuted into JJB as executive chairman at the start of the year, got much of the credit for this. But it’s not out of the woods yet – and another row with Sports Direct is just the kind of distraction it doesn’t need...
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Ashley loan row overshadows JJB fundraising plans
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