JJB Sports leads retailer fightback
The financial crisis is taking its toll on leading retailers with well-known names from fashion to wine struggling to stay afloat.
Last dice throw: JJB has issued new shares and is relisting on the smaller and cheaper AIM
JJB Sports, the leisure wear retailer founded by ex-footballer Dave Whelan, has resorted to delisting from the London Stock Exchange in order to survive.
JJB investors, including activist hedge fund Crystal Amber and Microsoft billionaire Bill Gates, voted overwhelmingly to issue more than 160m new shares, pumping £65m into the ailing chain.
JJB (down 1p to 25.5p) will use the capital to cut its debt of £21.2m, refurbish 133 stores and close up to 89 others.
By issuing so many new shares the company – whose market free-float will fall to 14%, breaking listing rules – will be forced to quit the London Stock Exchange and re-list on the smaller and cheaper Alternative Investment Market.
The move is a last throw of the dice for JJB Sports, which is unlikely to pay another dividend until at least 2016. If the gamble fails, lenders are likely to withdraw a £25m overdraft.
A more upmarket clothing chain, AllSaints, is in an even more perilous position, with US investor Goode Partners trying to put together a consortium of backers to save it from collapse.
Investor Jon Moulton confirmed yesterday that he had also joined talks to buy the company 'late in the day', although sources close to the situation said he was by no means the front-runner.
Lloyds, which has extended credit facilities of £28.5m to the group, has been supportive but has lined up KPMG in case there is no alternative to administration.
Wine-seller Oddbins, which folded on April 4 owing £8m to HM Revenue & Customs, is being stripped and sold for parts by another set of auditors, Deloitte.
Whittall's Wine Merchants, a privately-owned subsidiary of multi-millionaire businessman Raj Chatha's EFB Group, is buying 37 Oddbins stores, saving 200 jobs. Deloitte continues to seek prospective buyers for the remaining 52 shops.
HMV, another company struggling to stay afloat, is also coming under pressure to sell its flagship chain of book stores, Waterstone's, to 41-year-old Russian oligarch Alexander Mamut.
The entertainment retailer is considering a £35m bid from Mamut, a former adviser to Boris Yeltsin.
HMV meanwhile is considering launching a company voluntary agreement (CVA), a last-ditch move to stave off bankruptcy that allows a firm to trade while insolvent.
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