The board of JJB Sports announced that shareholders have overwhelmingly approved its proposed issue of 400 million new shares, intended to raise about £100 million (€111.7m-$164.9m) to keep the company afloat. The new shares started trading Tuesday morning on the London Stock Exchange.
The share issue is a combination of private placement and an offer of new shares. For the latter, the company said it had received acceptance for 90.4 percent of them by qualifying shareholders.
However, in an apparently contradictory move around the new share issue, one of JJB’s leading shareholders declared its support for the deal but then announced that it had more than halved its stake in JJB. Crystal Amber Fund committed to take up an allotment of 28.45 million JJB shares at the price of 25 pence each for the rights issue, but then it went on to sell more than 22 million JJB shares in the market at a price of 32.6 pence, reducing its stake to 5.45 percent of the issued capital before the rights issue. The investor stated that it had made a profit of 45.3 percent with its JJB package, which it acquired between April and June at an average of 22.43 pence per share, but will still take up its rights to the new shares.
After its big capital gain, Crystal Amber rebuilt much of its stake in JJB by acquiring some 60 million shares at around 28-30 pence on Tuesday. It now owns 74.5 million shares, equal to 11.4 percent of the total equity.
Separately, the prospectus filed for the rights issue has revealed some interesting new details about the investigations around former JJB executives. It was already known that the Office of Fair Trading (OFT) and the Serious Fraud Office (SFO) were looking into allegations of price fixing and other charges involving present and former JJB executives. The prospectus added that HM Revenue and the Serious Organized Crime Agency (SOCA) were on the case as well. The latter usually deals with serious cases involving drugs and money laundering, but has a unit for fraud as well.
The prospectus explained that, apart from items already reported in the last months, these investigations also looked into charges of unapproved expense claims, partly through use of company credit cards, and potential theft of company assets. Chris Ronnie, JJB chief executive until early this year, has denied any wrongdoing.
