Gates agrees to support £31.5m lifeline for JJB Sports

BELEAGUERED sports retailer JJB Sports has secured £31.5 million from investors, including Microsoft founder Bill Gates, to save it from collapse.

The Bill and Melinda Gates Foundation Trust, which holds a 5.5 per cent stake, has agreed to support a capital raising at 5p per share - which represents a 25 per cent premium on last Wednesday's closing share price - along with JJB's other main investors, Harris Associates, Crystal Amber and GoldenPeaks Capital. The four organisations together hold 44.3 per cent of JJB shares.

JJB stock, which prior to Chirstmas Eve had lost 83 per cent of its value over the last year, closed up 28 per cent at 5.49p on the last day of trading before Christmas, valuing the business at 35.73m.

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The retailer, which issued a profits warning in November, said its main lender, Bank of Scotland, had agreed to waive covenant tests for its 25m borrowing facility on the basis of the proposed capital raising.

The company had warned earlier this month it was likely to breach the covenant.

JJB also shook up its board just days before the Christmas break, with chairman John Clare and chief financial officer Lawrence Coppock stepping down to be replaced by Mike McTighe, a former Cable & Wireless executive and restructuring expert, and Dave Williams, former finance director of discount retailer TJ Hughes.

Gates, the billionaire philanthropist and founder of Microsoft, is no stranger to UK retail laggards.

He has built up a significant holding in Carpetright, the nation's biggest floor coverings retailer which earlier this month posted a 28 per cent fall in first-half profit.

News of JJB's funding lifeline offset reports of dire pre-Christmas trading, with sales at stores open over a year slumping 15.7 per cent in the six weeks to 19 December.

The firm blamed the fall on the extreme winter weather and "stock availability issues".