The board of JJB Sports said this morning that it knew all about chairman Sir David Jones’s £1.5m loan from Sports Direct boss Mike Ashley – but decided not to tell anyone about it. In an official statement to the Stock Market, JJB said it ‘viewed the arrangement as a private one... not requiring public disclosure,’ insisted it ‘does not give rise to any conflict of interest’, and expressed ‘unanimous support’ for the beleaguered chairman. We can see why JJB is so keen to draw a line under the matter, with the small matter of a £50m fundraising still to arrange. But it may not be so easy to sweep this under the carpet…
News of the loan first emerged over the weekend, but JJB seems to have initially opted for the tried-and-tested ‘ignore it and hope it goes away’ approach, focusing instead on its plans to raise an extra £50m for its turnaround plan. However, the swathes of negative coverage – not to mention the 25% drop in its share price yesterday – seems to have persuaded it to change tack. In its statement today, it suggested that there was nothing untoward about the arrangement because it was initiated before Sir David joined JJB as a non-exec in 2007. And since Jones apparently plans to pay it back ‘as soon as possible in order to avoid further distraction for the Company… The Board considers the matter closed.’
Nice try. But since Ashley is a major JJB shareholder and the boss of its biggest rival, we don’t quite see how JJB can claim there’s no potential for conflict. Even if it doesn’t affect Jones’s ability to do his job, it’s a bit hard to see why it decided against telling shareholders. It also mentioned today that details of the 2007 loan – which was for investment in a private company called Advanced Network Technologies – were revealed to its executive directors and advisers ‘earlier this year’. Since Jones has been a JJB non-exec since 2007, and his elevation to the executive chairman role was announced on January 2 this year, this seems odd. (As, to be fair, does the fact that he tapped Ashley for cash in the first place – what kind of bank would have turned down his business in 2007?)
Sir David has an impeccable retail reputation, and as JJB points out, he’s done a sterling job of guiding it through a disposal, a CVA and a refinancing within his first six months. With him at the helm, JJB finally looked to have some chance of surviving – so it’s no wonder some analysts think this story is a deliberate attempt by a rival to undermine its fundraising. Unfortunately for JJB, that plan seems to be working.
In today's bulletin:
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JJB supports chairman in bid to diffuse Ashley row
Editor's blog: Ecclestone and getting things done
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