JJB Sports cries foul over rights 'smear'

Published on Saturday 10 October 2009 15:07

JJB SPORTS has lodged a complaint with the Financial Services Authority over allegations that it was subject to a smear campaign aimed at undermining its £100m rights issue.

It is expected that the FSA will now consider whether to investigate possible market abuse.

Sources close to JJB yesterday told Scotland on Sunday that there had been a "deliberate attempt to derail the rights issue".

The company was believed to be within an hour of announcing the fundraising but was forced to delay after rumours began circulating concerning the affairs of executive chairman Sir David Jones.

One source, who said he had never come across anything like it, said: "There are people out there who do not want JJB to succeed."

Two major shareholders, understood to be the Tosca Fund and Schroders, withheld support for the share issue as unease spread. It forced JJB shares to fall 1.75p to 32.75p.

The allegations were categorically denied by the company following an investigation by the non-executive directors led by former Dixons chief executive John Clare.

Yesterday a spokesman for JJB said: "Following a number of allegations circulating in the market we postponed the fund-raising.

"We have investigated them thoroughly overnight and found them to be false and defamatory.

"We now plan to report the matter to the relevant authorities – the FSA – and press ahead with the fundraising. We are hoping it will go ahead this week."

The rights issue is pitched higher than initially planned as investors were expecting to meet a call for 60m.

This is the latest controversy to surround JJB, which sells Rangers Football Club merchandise. It has received immunity in an Office of Fair Trading investigation into the sports retailing industry. The Serious Fraud Office is also investigating. Earlier this year Jones agreed to provide the OFT with information on rivals who are suspected of rigging the market.

Jones's business affairs also came under scrutiny after it emerged that two years ago he had borrowed 1.5 million from Mike Ashley, the founder of rival firm Sports Direct and owner of Newcastle United Football Club.

Jones was knighted earlier this year following a successful career in retailing. He was head of Next, which he developed into a leading player on the high street in the 1980s.

He was installed as executive chairman of JJB this year to turn round the ailing company.