TIDMJJB
RNS Number : 8801A
JJB Sports PLC
05 April 2012
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR
RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN
WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA,
JAPAN AND SOUTH AFRICA AND SHOULD NOT BE DISTRIBUTED IN, FORWARDED
TO OR TRANSMITTED INTO ANY JURISDICTION WHERE TO DO SO MIGHT
CONSTITUTE A VIOLATION OF LOCAL APPLICABLE SECURITIES LAWS OR
REGULATIONS
4 April 2012
JJB Sports plc announces committed GBP30 million investment and
financing package including strategic investment by Dick's Sporting
Goods, continued support from key stakeholders and new banking
arrangements to fund turnaround and store transformation
Further to the announcement in response to press speculation on
3 April 2012 regarding discussions with its lending banks and a
strategic partner in relation to additional funding, JJB Sports plc
("JJB" or the "Company"), one of the UK's leading multi-channel
sporting goods retailers, today announces that it has reached
agreement in relation to a strategic investment package with a
number of the Group's leading investors and Dick's Sporting Goods,
Inc. ("Dick's"), an authentic full-line sporting goods retailer
based in the USA. In addition, the Company has agreed a financing
package with adidas Group, a key supplier partner, and Bank of
Scotland.
Highlights
-- Dick's to invest an initial GBP20 million in new shares and
convertible loan notes, with the right to invest a further GBP20
million in convertible loan notes
-- Opportunity for JJB to draw on Dick's experience in the
sports retail market, with at least one representative of Dick's
expected to join JJB board
-- IAML, Harris Associates, Crystal Amber and BMGFT to invest an
additional GBP10 million by exercising existing warrants and
subscribing for new shares
-- adidas Group, a key supplier partner of JJB, to provide
security for a two-stage loan of up to GBP15 million to assist in
the Group's store transformation programme
-- Additional funding to accelerate store transformation
programme ahead of the UEFA Euro Championships and the London 2012
Olympics, following strong performance of transformed store
format
-- Bank of Scotland to extend existing facility arrangements until May 2015
-- JJB has today separately issued its preliminary results for
the 52 weeks ended 29 January 2012 and a trading statement for the
nine week period to 1 April 2012
Keith Jones, Chief Executive of JJB Sports said:
"We believe this investment package and strategic alliance with
Dick's will provide a real opportunity to accelerate JJB's
turnaround. Dick's is a premier sporting goods retailer and we look
forward to working with them. We are also extremely grateful to our
key stakeholders for their continued support and the Bank of
Scotland for the confidence they have demonstrated in the long-term
future of our Company."
"We have always said that the turnaround of JJB was never going
to be easy or quick, and the current retail environment has made
our work even more difficult. But we have made significant progress
since our restructuring in April last year particularly in
e-commerce, cost efficiencies and the early results from our new
store format. With the financial and commercial support we are
announcing today, we can go further and faster and take advantage
of the tremendous opportunities we see in our market in 2012 and
beyond."
Edward W. Stack, Chairman and CEO of Dick's Sporting Goods,
said:
"We believe that JJB is a strong company with the potential to
become a leading multi-channel sporting goods retailer both in
Britain and throughout Europe. We look forward to providing the
company with financial support at this crucial stage of its
turnaround and to using our expertise in the U.S. market to help
guide its growth efforts."
For further information, please contact:
Keith Jones
Dave Williams
JJB Sports plc
01942 221 400
Neil Bennett
Emma Burdett
Maitland
020 7379 5151
Heraclis Economides
Richard Thomas
Numis Securities Limited (joint financial adviser, broker and
nominated adviser)
020 7260 1000
David McCorquodale
Alex Hartley
KPMG LLP (joint financial adviser)
020 7311 1000
A copy of this announcement can also be viewed on the JJB
corporate website, www.jjbcorporate.co.uk. Neither the content of
the JJB corporate website nor any website accessible by hyperlinks
on the JJB corporate website is incorporated in, or forms part of,
this announcement.
Numis Securities Limited is authorised and regulated by the
Financial Services Authority in the United Kingdom and is acting as
nominated adviser to the Company and no one else in relation to the
matters referred to in this announcement and is not, and will not
be, responsible to anyone other than the Company for providing the
protections afforded to its clients or for providing advice in
relation to the same.
KPMG LLP which is authorised and regulated by the Financial
Services Authority for investment business activities, is acting
for the Company as joint financial adviser in relation to the
matters referred to in this announcement and is not, and will not
be, acting for any other person in relation to the same. KPMG LLP
is not, and will not be, responsible to anyone other than Company
for providing the protections afforded to its clients or for
providing advice in relation to any matters referred to in this
announcement.
This announcement is for information purposes only and does not
constitute or form part of any offer to issue or sell, or the
solicitation of an offer to acquire, purchase or subscribe for, any
securities in any jurisdiction and should not be relied upon in
connection with any decision to subscribe for or acquire any
securities. In particular, this announcement does not constitute or
form part of any offer to issue or sell, or the solicitation of an
offer to acquire, purchase or subscribe for, any securities in the
United States.
The securities referred to in this announcement have not been
and will not be registered under the US Securities Act of 1933, as
amended (the "Securities Act"), or with any securities regulatory
authority of any state or other jurisdiction of the United States
and, accordingly, may not be offered, sold, resold, taken up,
transferred, delivered or distributed, directly or indirectly, in
or into the United States absent registration under, or an
applicable exemption from the registration requirements of, the
Securities Act, and in compliance with any applicable securities
laws of any state or other jurisdiction of the United States. There
will be no public offer of the securities referred to in this
announcement in the United States.
Certain statements made in this announcement constitute
forward-looking statements. Forward looking statements can be
identified by the use of words such as "may", "will", "expect",
"intend", "estimate", "anticipate", "believe", "plan", "seek",
"continue" or similar expressions and relate to, among other
things, the performance of the business of JJB in the near to
medium term, the business strategy of JJB and its plans and
objectives for future operations. Such statements are based on
current expectations and, by their nature, are subject to a number
of risks and uncertainties that could cause actual results and
performance to differ materially from any expected future results
or performance, expressed or implied, by the forward-looking
statement. Factors that might cause forward looking statements to
differ materially from actual results, include among other things,
general economic conditions in the United Kingdom. These
forward-looking statements speak only as of the date of this
announcement. The information and opinions contained in this
announcement are subject to change without notice and, subject to
compliance with applicable law, JJB assumes no responsibility or
obligation to update publicly or review any of the forward-looking
statements.
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR
RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN
WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA,
JAPAN, AND SOUTH AFRICA AND SHOULD NOT BE DISTRIBUTED IN, FORWARDED
TO OR TRANSMITTED INTO ANY JURISDICTION WHERE TO DO SO MIGHT
CONSTITUTE A VIOLATION OF LOCAL APPLICABLE SECURITIES LAWS OR
REGULATIONS
4 April 2012
JJB Sports plc announces committed GBP30 million investment and
financing package including strategic investment by Dick's Sporting
Goods, continued support from key stakeholders and new banking
arrangements to fund turnaround and store transformation
Introduction
Further to the announcement in response to press speculation on
3 April 2012 regarding discussions with its lending banks and a
strategic partner in relation to additional funding, JJB Sports plc
("JJB" or the "Company"), one of the UK's leading multi-channel
sporting goods retailers, today announces that it has reached
agreement in relation to a strategic investment package with a
number of the Group's leading investors and Dick's Sporting Goods,
Inc. ("Dick's"), an authentic full-line sporting goods retailer
based in the USA. In addition, the Company has agreed a financing
package with adidas Group, a key supplier partner, and Bank of
Scotland.
The strategic investment comprises an initial committed GBP30
million financing package with Dick's and a number of the Company's
key shareholders. In addition, adidas Group, one of the world's
leading sports apparel and footwear groups and a key supplier
partner to JJB, has agreed to provide security for a two stage loan
of up to GBP15 million and the Bank of Scotland ("BoS") has agreed
new banking terms and agreed to extend existing facility
arrangements until 31 May 2015.
As part of the strategic investment, representatives of Dick's
are expected to join the Board. Dick's expertise will assist JJB in
accelerating its turnaround and growth plan, drawing on its
considerable experience and success in the sports retail
market.
The financing package will enable the Group to accelerate its
store transformation programme ahead of the expected rise in sales
around both the UEFA Euro Championships and the London 2012
Olympics. The Group intends to invest over GBP20 million to
transform 60 of its most important stores in 2012 and 2013 into an
enhanced format that has already been tested and demonstrated
significantly improved sales and cash margins.
Key terms of the strategic investment and financing package
The Company intends to raise GBP30 million (before expenses) in
aggregate by way of the exercise of 2011 Warrants and the issue of
the Subscription Shares and the First Convertible Loan Notes,
conditional, among other things, upon the passing of the
Subscription Resolutions at the General Meeting.
IAML, Harris Associates, Crystal Amber and BMGFT, the Company's
four largest shareholders, and Dick's have today entered into a
Subscription Agreement with the Company pursuant to which:
-- IAML, Harris Associates, Crystal Amber and BMGFT have agreed
to exercise 2011 Warrants resulting in the issue of 22,712,894
Warrant Shares at an exercise price of 10 pence per share;
-- IAML, Harris Associates, Crystal Amber, BMGFT and Dick's have
agreed to subscribe for a total of 89,787,106 Subscription Shares
at 10 pence per share; and
-- Dick's has agreed to subscribe for the First Convertible Loan
Notes in an aggregate principal amount of GBP18.75 million and has
been granted the right (but does not have the obligation) to
subscribe for the Second Convertible Loan Notes in an aggregate
principal amount of up to GBP20 million, in each case subject to
the terms and conditions set out in the Convertible Loan Note
Instrument.
Pursuant to the terms of the Convertible Loan Note Instrument,
the First Convertible Loan Notes and the Second Convertible Loan
Notes will convert into a maximum of 887,871,178 Ordinary Shares
representing approximately 61% of the Company's then fully diluted
share capital.
As part of the strategic investment by Dick's, the Company and
Dick's have also agreed to enter into the Relationship Agreement
pursuant to which Dick's will have the right to appoint one
representative non-executive director to the Board for so long as
it holds any unconverted Convertible Loan Notes or two
representative non-executive directors to the Board for so long as
it holds at least 10% of the issued ordinary share capital of the
Company from time to time. In addition to these rights, Dick's will
also be entitled to appoint two Board observers (or one Board
observer for such time as Dick's has at least one non-executive
director on the Board).
The Board has also reached agreement with BoS, the Company's
lender, regarding the continued provision of the BoS Facility
through to May 2015, an agreement with adidas Group, one of the
Company's key supplier partners, for the provision of a loan or
security for a loan of up to GBP15 million and the terms of an
intercreditor arrangement with BoS, Dick's and adidas Group, each
agreement subject to completion of the Subscription and the
satisfaction of certain other conditions precedent.
In particular, the strategic investment and financing package
requires shareholder approval. Shareholder approval is required for
the granting of authority to allot and issue of the Subscription
Shares and the Convertible Loan Notes and the disapplication of
statutory pre-emption rights in relation to the same, and to
approve the waiver by the Panel of the obligations of Dick's to
potentially make a mandatory offer for the Company under Rule 9 of
the Code following completion of the Subscription and conversion of
the Convertible Loan Notes.
Information on Dick's Sporting Goods
Dick's Sporting Goods, Inc. is an authentic full-line sporting
goods retailer based in the USA offering a broad assortment of
brand name sporting goods equipment, apparel and footwear in a
specialty store environment. Dick's also owns and operates Golf
Galaxy, LLC, a golf specialty retailer. As of 28 January 2012,
Dick's operated 480 Dick's Sporting Goods stores in 43 states with
a total retailing space of 26.3 million square feet, 81 Golf Galaxy
stores in 30 states with 1.3 million square feet as well as
e-commerce web sites and catalogue operations for both Dick's
Sporting Goods and Golf Galaxy.
Dick's reported consolidated net income for the 52 weeks ended
28 January 2012 of $263.9 million on a GAAP basis, or $2.10 per
diluted share, compared to consolidated net income for the 52 weeks
ended January 29, 2011 of $182.1 million, or $1.50 per diluted
share. Net sales for the full year 2011 increased 7.0% to $5.2
billion as compared to the full year 2010 primarily due to the
growth of Dick's store network and a 2.0% increase in consolidated
same store sales.
Update on implementation of the revised business plan and
CVA
In the first half of 2011, the Board focused on stabilising the
Group's financial position through a significant restructuringand
refinancing. Following completion of the restructuring and
refinancing and the Company's move to trading on AIM on 28 April
2011, the Board has progressed with the key elements of the Group's
revised business plan as follows:
-- Rightsizing the store portfolio through implementation of the
CVA - The Group has successfully implemented the first phase of the
CVA with 41 of the 43 stores identified for closure on or before 24
April 2012 (referred to in the CVA Document as the "First Period
Compromised Leases") now closed, of which 11 have been surrendered
to the landlords, generating an annualised rent saving of GBP1.6
million. For the remaining two stores that were identified as First
Period Compromised Leases, rents continue to be paid on a reduced
basis of 50 per cent of the contractual liability (plus 5 per cent
dilapidations and any contractual amount for service charges) until
24 April 2012. For the additional 46 stores identified for closure
on or before 24 April 2013 (referred to in the CVA Document as the
"Second Period Compromised Leases"), 13 stores have been
surrendered to the landlords as at 1 April 2012 (being the last
practicable date prior to publication of this document), generating
an annualised rent saving of GBP1.8 million and one store has
returned to the core estate. For the remaining 32 stores that were
identified as Second Period Compromised Leases, rents continue to
be paid on a reduced basis of 50 per cent of the contractual
liability (plus 5 per cent dilapidations and any contractual amount
for service charges) and will continue to be paid until 24 April
2013. As at 1 April 2012 (being the last practicable date prior to
publication of this document), management has also achieved
annualised rates savings of approximately GBP2.9 million.
Management estimate savings of approximately GBP4.1 million in
negative contribution and a further incremental saving in working
capital.
-- Aligning the Company's cost base and working capital
management - Management has secured significant cost savings across
all key business functions. Warehouse and distribution costs have
reduced by GBP4.1 million from GBP20.4 million to GBP16.3 million,
with estimated annualised savings in excess of GBP5.6 million now
identified as compared to management's original target of GBP3.5
million (as announced on 6 April 2011), with further opportunities
identified beyond this original target. Through better deployment
of our colleagues, particularly at peak trading periods, management
has achieved savings in respect of core store wages of GBP5.1
million, again with estimated annualised savings in excess of
management's original target of GBP3.3 million (as announced on 6
April 2011). Other store costs and central costs have also been
reduced on a systematic basis through better procurement, improved
utilisation and efficiencies and tighter cost control processes,
with actual annualised savings exceeding management's original
target of GBP2.4 million (as announced on 6 April 2011). In
addition, the Company continues to prudently manage its working
capital, cash and available resources and has targeted an
acceleration of its stock efficiency initiatives through better
management of stock intake, improved stock allocation and
replenishment and being more proactive in respect of in-season
stock clearance.
-- Improving the Company's basic retail disciplines - Management
has made significant progress in improving the basic retail
disciplines in the Company. Since completion of the April 2011
Capital Raising, management has been defining and implementing key
processes and systems, and identifying and recruiting new talent
particularly to advance the Company's buying, merchandising,
marketing and multi-channel functions. Management is confident that
it now has clear visibility around stock intake, improved stock
allocation, better stock sell-through, defined clearance capability
and improved stock file integrity. Improved visibility of stock
intake has facilitated the development of a multichannel trading
and marketing calendar with co-ordinated campaigns aligned to and
supported by key supplier partners.
-- Investment in store development - The Company announced on 6
April 2011 (in connection with the April 2011 Capital Raising) that
it had devised three levels of store and proposition development
that had been incorporated into the Group's revised business plan -
retail basics, refresh refit and full transformation. Since
completion of the April 2011 Capital Raising, the macroeconomic
deterioration in retail trading conditions led the Group to
prioritise the preservation of cash in the short term and scale
back the extent to which the Group was able to invest in store and
proposition development. However, despite the challenging trading
conditions, the Group has still completed 103 stores for its retail
basics programme, 8 stores for its refresh refit programme and two
stores for full transformation. The refit programme cascaded the
key initiatives from the original six transformation stores
including navigation, product adjacencies, space mix and point of
sale. These store programmes were completed at a significantly
lower cost than originally budgeted, this supported the improvement
in second half performance. The Group's capital expenditure in
respect of stores forming part of the refresh refit programme was
GBP0.3 million, a considerable saving on original estimates.
-- Continuing to source new ranges and product - The Company's
own-brand development has gained momentum, with the introduction of
an own-brand swimming range H2O in September 2011, and expansion of
the exclusive Run 365 footwear and apparel range in October 2011.
In addition, the Company has added Mind, Body & Soul, Travel
Fox, Ecko Unltd and Pro Performance as exclusive branded products
in the second half of 2011. In aggregate, exclusive and own branded
product was 6.7 per cent of the sales mix at year end. Management
continues to work closely with all its key supplier partners to
develop exclusive and differentiated products and propositions.
Recent additions include ASICS and Saucony, which also underpin the
Company's positioning as the authentic multi-channel sporting goods
retailing brand in the UK. In addition, management has developed a
number of new service initiatives, such as introducing Gait
Analysis into a number of stores to ensure each customer is fitted
with the right footwear for them and their sport. Management has
also built on the successful Footwear Recycling initiative, where
in excess of 25,000 training shoes have been recycled with the
proceeds going to Whizz Kids who provide wheelchairs to enable
children to participate in sport.
-- Focusing on customer service training and people capability
training - Customer service and people capability training remains
a key objective for management and remains a key differentiator in
the market. Since completion of the April 2011 Capital Raising, the
Company has significantly upgraded its senior management team and
invested in new personnel in the 52 weeks to 29 January 2012. In
addition, the Company has recruited 10 new store managers
externally; completed customer service training for over 4,000
colleagues; graduated 26 colleagues from its "stepping into
management" personal development programme; and trained 191 members
of the management team in sales floor coaching.
-- Improving the multi-channel proposition - Following the
recruitment of a new Head of Multi-channel on 4 July 2011, the
Company has made progress in enhancing its multi-channel
proposition resulting in significant growth in sales. Developments
include the launch of a mobile version of the website, introducing
Paypal and developing an eBay and Amazon offering. In addition, the
Company has enhanced the online customer shopping experience by
adding new online exclusive products as well as improving the
landing pages and site navigation. Alongside other initiatives and
improvements, this has provided customers with an easier and more
convenient shopping experience and resulted in significantly
increased traffic and conversion rates.
Background to and reasons for the strategic investment and
financing package
Poor macroeconomic environment and factors linked to the
turnaround plan
Since completion of the April 2011 Capital Raising and the
Company's move to trading on AIM on 28 April 2011, the poor
macroeconomic environment and ensuing low levels of consumer
confidence continue to adversely impact the UK retail market and
this has put significant pressure on the Group's sales performance.
As noted above, considerable progress has been made in implementing
the Group's revised business plan, however, management has been
forced to prioritise the preservation of cash in the short term and
scale back the extent to which the Group has been able to invest in
store and proposition development, particularly in respect of those
stores that management has identified as requiring a full
transformation.
As well as being adversely impacted by the deteriorating
macroeconomic environment the business was also affected by factors
related to the turnaround programme. A key component of the
turnaround plan was improving capability by sourcing executives to
fill key positions within the business. Whilst successful in
attracting talent, the key recruits as Trading Director, Marketing
Director, Retail Director and Head of Multi-channel did not join
the business until mid-summer. A significant factor impacting the
turnaround was the necessity to deal with the stock overhang
resulting from historically poor buying processes and a dynamically
changing retail estate. The sell through of this stock took longer
and was more margin dilutive than was envisaged at the time of the
capital raisings. Furthermore whilst our new stock packages were
much improved and more focused than prior periods, the in-take has
often been delayed due to cash constraints and is still not
sufficiently differentiated from those of our competitors. As a
consequence, whilst our trading performance improved in the second
half compared to the first the scale of improvement was not as
great as originally planned. Finally, whilst we have seen progress
in a number of categories, our key football category has not
progressed as quickly as we had hoped. In response management has
appointed the founder of the Football e-tailer Kitbag, as Director
of Football, in order to develop the strategy in this area.
Proposed acceleration of store refurbishment programme
In order to maximise the unique opportunities arising from the
London 2012 Olympics and the UEFA Euro Championships, management
intend to accelerate the refurbishment programme in a number of
stores. The store refurbishment programme is also fundamental to
delivering a significantly differentiated authentic sports
retailing experience for customers and will attract new and
exclusive brands and products from supplier partners.
Building on the success of the investment in the first six
transformation stores that demonstrated a 13% increase in sales and
a 22% increase in cash margin over a 40 week period when compared
with the rest of the estate, management has since developed an
enhanced store concept, which has been trialled in the store in
Broughton Park, Chester.
The enhanced store concept is built on the three pillars of
differentiated product, service and channel that are essential to
creating an authentic sports retail store and experience:
-- Product Offer - The store has a wide range of branded and
exclusive own brand authentic sports apparel, footwear and
accessories for fans through to players and athletes.
-- Service - Service is provided by colleagues who "know their
stuff" as they are sports enthusiasts and have often participated
or competed in the sports featured in the store. The colleagues
have been trained in the latest product and performance
technologies and can give advice necessary to ensure all of our
customers get the right product for them and their sport.
Colleagues will also be able to provide services such as Gait
Analysis for runners and personalisation on teamwear products. The
store colleague team are part of the local sporting community and
will support and provide access to local coaching and classes, some
of which will be provided in store.
-- Channel - Stores are just part of the shopping experience as
a customer's shopping trip will often start or finish online.
Management have ensured the concept creates the "best of both
worlds" with e-commerce and online being seamlessly joined with an
inspiring instore experience. This means customers can shop online
and then collect at store with the added benefit of being able to
try products on or get advice to ensure they have selected the
right product for them. Equally, iPad technology is integrated into
the store design to enable customers to access extended ranges and
product information online provided and supported by the world's
leading sports brands.
The store experience is inspiring and brings all the excitement
and passion of sport to customers in the most authentic way. The
fixtures and fittings provide flexibility to showcase some of the
most exciting product in sport and also accommodate the movement of
space as sports move in and out of season.
The results from Broughton Park, Chester are very encouraging.
Since the store reopened, its like-for-like sales performance has
been 25.6 per cent and its cash margin has grown by 24.5 per cent
on a like-for-like basis.
The plan is to transform 25 stores before the end of October
2012 and then a further 35 stores in 2013 in a manner consistent
with the concepts displayed in Broughton Park, Chester. The capital
cost per store is planned at approximately GBP30 per square foot,
bringing the total cost of this transformation programme over the
next two years to over GBP20 million.
Strategic investment and financing package and proposed further
capital raising in 2013
In order to provide the Company with access to the additional
working capital and the capital resources required to undertake the
necessary investment in store development, the Board has negotiated
the strategic investment and financing package with a number of the
Company's key stakeholders and Dick's, a new strategic partner.
The Company's four largest shareholders and Dick's have
committed to invest GBP30 million, Dick's has the right to invest a
further GBP20 million and adidas Group has agreed to arrange or
provide security for a loan for up to GBP15 million, of which the
first tranche amounting to GBP8.4 million, will be made available
for drawdown by the Company in the first year.
Accordingly, following completion of the Subscription, the
Company will have access to approximately GBP38.4 million in
additional cash resources (which includes the first tranche of the
Trade Loan but excludes amounts available under the BoS Facility)
to improve the Group's working capital position and to increase the
Group's cash and undrawn committed financing facilities.
The proceeds of the investment will first be used to pay down
the total amount drawn under the BoS Facility (such amounts which
have been repaid will remain available to be redrawn in accordance
with the terms of the BoS Facility). As at 1 April 2012, (being the
last practicable date prior to publication of this document), the
amount drawn under the BoS Facility was GBP20.6 million. The
remainder of the net proceeds will be credited to cash on the
Group's balance sheet and used, along with amounts available to be
redrawn under the terms of the BoS Facility, to fund the ongoing
working capital requirements of the Group and to implement the
Group's capital expenditure plans, notably the store transformation
plan.
In addition to the significant capital resources to be provided
by Dick's as part of its investment, management is of the view that
the introduction of Dick's as a strategic partner will enable the
Company to draw upon Dick's valuable experience in the sports
retail market, which, in turn, will assist management in
accelerating the Group's revised business plan.
Notwithstanding this, the strategic investment and financing
package will not address the medium term financing requirements of
the Group and accordingly the Company currently believes that it
will require additional funding in the first quarter of 2013.
However, the uncertain and volatile outlook in the UK economy
results in difficulties in forecasting sales performance in the
short and medium term and the achievability of the Group's business
plan will be a critical factor in maintaining sufficient headroom
on cash and covenants.
Whilst this additional funding is not committed, the further
round of funding is expected to be provided through:
-- the subscription by Dick's for the Second Convertible Loan
Notes in the aggregate principal amount of GBP20 million (which
Dick's has the right (but not the obligation) to subscribe for
under the terms of the Subscription Agreement);
-- a further share offering of new Ordinary Shares, to the
extent permitted by law and regulation, to all of the Company's
Shareholders to raise the aggregate sum of GBP5 million; and
-- the continued support of BoS and the second tranche of the
Trade Loan, amounting to GBP6.6 million, being made available for
drawdown by the Company following the successful completion of the
further capital raising.
Importance of the Shareholder vote
The Subscription Resolutions must be passed by Shareholders at
the General Meeting in order for the Subscription to proceed and,
as the availability of the Amended BoS Facility and the Trade Loan
are dependent upon the receipt of proceeds under the Subscription,
in order for the Amended BoS Facility and the Trade Loan to become
effective.
The Group's short-term cash flow forecasts indicate that the
Group will not experience a funding shortfall before the expected
date of receipt of the net proceeds of the Subscription on or
around 27 April 2012. However, the headroom available to the
Company in the period leading up to 27 April 2012 is limited and
management must continue to carefully control its cash and
available resources during this period.
If the Subscription Resolutions are not passed by Shareholders
at the General Meeting and the Subscription does not proceed, the
Company will be in default of the current BoS Facility immediately
following the General Meeting, and the Amended BoS Facility and the
Trade Loan will not become effective. In these circumstances, and
in the absence of any other funding proposal, the Directors would
be likely to conduct a formal sale process for the Company.
However, if a purchaser cannot be found for the Company under the
formal sale process, the Directors believe that the Company will
not be able to continue to trade as a going concern which would
result in the appointment of receivers, liquidators or
administrators.
Accordingly, the Directors believe that the Subscription is in
Shareholders' best interests and that it is very important that
Shareholders vote in favour of the Subscription Resolutions so that
the Subscription can proceed and, as a consequence, the Amended BoS
Facility and the Trade Loan can come into effect.
If the Subscription Resolutions are passed and the Subscription
proceeds, the proceeds of the strategic investment and financing
package will not address the Company's medium term working capital
requirements and the Directors believe that the Company will
require further financing in the first quarter of 2013 (as
described above).
Publication of Shareholder Circular and General Meeting
The Company will make copies of the Shareholder Circular and
Annual Report and Accounts 2012 available on its website at
www.jjbcorporate.co.uk later today. A General Meeting will be held
at 3.00 p.m. on 26 April 2012 at the offices of Herbert Smith LLP,
Exchange House, Primrose Street, London, EC2A 2HS to consider and,
if thought fit, to approve the Resolutions.
For further information, please contact:
Keith Jones
Dave Williams
JJB Sports plc
01942 221 400
Neil Bennett
Emma Burdett
Maitland
020 7379 5151
Heraclis Economides
Richard Thomas
Numis Securities Limited (joint financial adviser, broker and
nominated adviser)
020 7260 1000
David McCorquodale
Alex Hartley
KPMG LLP (joint financial adviser)
020 7311 1000
A copy of this announcement can also be viewed on the JJB
corporate website, www.jjbcorporate.co.uk. Neither the content of
the JJB corporate website nor any website accessible by hyperlinks
on the JJB corporate website is incorporated in, or forms part of,
this announcement.
Numis Securities Limited is authorised and regulated by the
Financial Services Authority in the United Kingdom and is acting as
nominated adviser to the Company and no one else in relation to the
matters referred to in this announcement and is not, and will not
be, responsible to anyone other than the Company for providing the
protections afforded to its clients or for providing advice in
relation to the same.
KPMG LLP which is authorised and regulated by the Financial
Services Authority for investment business activities, is acting
for the Company as joint financial adviser in relation to the
matters referred to in this announcement and is not, and will not
be, acting for any other person in relation to the same. KPMG LLP
is not, and will not be, responsible to anyone other than Company
for providing the protections afforded to its clients or for
providing advice in relation to any matters referred to in this
announcement.
This announcement is for information purposes only and does not
constitute or form part of any offer to issue or sell, or the
solicitation of an offer to acquire, purchase or subscribe for, any
securities in any jurisdiction and should not be relied upon in
connection with any decision to subscribe for or acquire any
securities. In particular, this announcement does not constitute or
form part of any offer to issue or sell, or the solicitation of an
offer to acquire, purchase or subscribe for, any securities in the
United States.
The securities referred to in this announcement have not been
and will not be registered under the US Securities Act of 1933, as
amended (the "Securities Act"), or with any securities regulatory
authority of any state or other jurisdiction of the United States
and, accordingly, may not be offered, sold, resold, taken up,
transferred, delivered or distributed, directly or indirectly, in
or into the United States absent registration under, or an
applicable exemption from the registration requirements of, the
Securities Act, and in compliance with any applicable securities
laws of any state or other jurisdiction of the United States. There
will be no public offer of the securities referred to in this
announcement in the United States.
Certain statements made in this announcement constitute
forward-looking statements. Forward looking statements can be
identified by the use of words such as "may", "will", "expect",
"intend", "estimate", "anticipate", "believe", "plan", "seek",
"continue" or similar expressions and relate to, among other
things, the performance of the business of JJB in the near to
medium term, the business strategy of JJB and its plans and
objectives for future operations. Such statements are based on
current expectations and, by their nature, are subject to a number
of risks and uncertainties that could cause actual results and
performance to differ materially from any expected future results
or performance, expressed or implied, by the forward-looking
statement. Factors that might cause forward looking statements to
differ materially from actual results, include among other things,
general economic conditions in the United Kingdom. These
forward-looking statements speak only as of the date of this
announcement. The information and opinions contained in this
announcement are subject to change without notice and, subject to
compliance with applicable law, JJB
assumes no responsibility or obligation to update publicly or
review any of the forward-looking statements.
Appendix - Definitions
2011 Warrant Instrument the warrant instrument dated 24 February
2011 between the Company and the 2011
Warrantholders
2011 Warrantholders means IAML, Harris Associates, Crystal
Amber, Bill and Melinda Gates Foundation
Trust and GoldenPeaks Capital
2011 Warrants the warrants issued on 24 February 2011
to the 2011 Warrantholders pursuant to
the 2011 Warrant Instrument
Annual Report and the Company's annual report and accounts
Accounts 2012 for the 52 weeks ended 29 January 2012
adidas Group adidas AG and its subsidiaries from time
to time
AIM AIM, a market operated by the London
Stock Exchange
Amended BoS Facility the BoS Facility as amended by an amendment
and restatement agreement dated 4 April
2012
April 2011 Capital the firm placing and placing and open
Raising offer involving the issue of 162.5 million
new ordinary shares of 1 penny each at
an issue price of 40 pence per new share,
approved by the requisite number of members
at a general meeting held on 26 April
2011
BMGFT Bill & Melinda Gates Foundation Trust
of 2365 Carillon Point, Kirkland, Washington,
98033, USA
Board or Directors the board of directors of the Company
BoS Bank of Scotland plc, a company incorporated
in Scotland with registered number SC327000
with its registered office at The Mound,
Edinburgh, E1 5HP
BoS Facility the GBP25 million secured working capital
facility provided by BoS, pursuant to
an agreement dated 3 April 2009 (as amended
and/or amended and restated from time
to time)
Code the City Code on the Takeovers and Mergers
issued by the Panel
Company or JJB JJB Sports plc, a public company incorporated
in England & Wales with registered number
01024895 with its registered office at
Martland Park, Challenge Way, Wigan,
Lancashire, WN5 0LD
Convertible Loan the deed constituting the Convertible
Note Instrument Loan Notes to be executed by the Company
and Dick's
Convertible Loan the First Convertible Loan Notes and
Notes the Second Convertible Loan Notes
Crystal Amber Crystal Amber Fund Limited of Heritage
Hall, Le Marchant St,
St. Peter Port, GY1 4HY, Guernsey
CVA means the company voluntary arrangement
set out in the CVA Document
CVA Document means the document published by the Company
and Blane Leisure Limited on 3 March
2011 under Part I of the Insolvency Act
1986 (as amended from time to time)
Dick's Dick's Sporting Goods, Inc. of 345 Court
Street, Coraopolis, Pennsylvania, 150108,
USA
Directors or Board the board of directors of the Company
Existing Ordinary the Ordinary Shares in issue at the date
Shares of the Shareholder Circular
First Convertible the Junior Secured Convertible Loan Notes
Loan Notes to be issued to Dick's in the aggregate
principal amount of GBP18.75 million
on the terms and conditions of the Convertible
Loan Note Instrument
General Meeting the general meeting of the Company convened
by the Notice of General Meeting to be
held at 3.00 p.m. on 26 April 2012 at
the offices of Herbert Smith LLP, Exchange
House, Primrose Street, London, EC2A
2HS
Group the Company and its subsidiary undertakings
from time to time
Harris Associates Harris Associates L.P. of Two North LaSalle
Street, Suite 500, Chicago, Illinois,
60602, USA
IAML Invesco Asset Management Limited, acting
as agent for and on behalf of its discretionary
managed clients, of 30 Finsbury Square,
London, EC2A 1AG, UK
JJB or Company JJB Sports plc, a public company incorporated
in England & Wales with registered number
01024895 with its registered office at
Martland Park, Challenge Way, Wigan,
Lancashire, WN5 0LD
London Stock Exchange London Stock Exchange plc
New Ordinary Shares the new Ordinary Shares to be issued
by the Company pursuant to the Subscription
and "New Ordinary Share" means one of
them
Notice of General the notice of General Meeting set out
Meeting at the back of the Shareholder Circular
Ordinary Shares the ordinary shares of 1 pence each in
the capital of the Company (including
the Existing Ordinary Shares and the
New Ordinary Shares)
Panel the Panel on Takeovers and Mergers
Relationship Agreement the agreement to be entered into between
the Company and Dick's following completion
of the Subscription
Resolutions the resolutions set out in the Notice
of General Meeting
Rule 9 Rule 9 of the Code
Second Convertible means the Junior Secured Convertible
Loan Notes Loan Notes for which Dick's has the right
(but not the obligation) to subscribe
for up to an aggregate principal amount
of GBP20 million on the terms and conditions
of the Convertible Loan Note Instrument
Shareholder any holder of Ordinary Shares
Shareholder Circular the Company's circular to Shareholders
dated 4 April 2012
Subscription the issue of Warrant Shares, Subscription
Shares and First Convertible Loan Notes
on the terms of the Subscription Agreement
and (in respect of the First Convertible
Loan Notes) the Convertible Loan Note
Instrument
Subscription Agreement the subscription agreement entered into
between the Company, IAML, Harris Associates,
Crystal Amber, Gates Foundation and Dick's
setting out the obligations of IAML,
Harris Associates, Crystal Amber and
Dick's to exercise the 2011 Warrants,
subscribe for the Subscription Shares
and the obligations of Dick's to subscribe
for the First Convertible Loan Notes
Subscription Shares the 89,787,106 New Ordinary Shares, being
the aggregate number of Ordinary Shares
to be issued to IAML, Harris Associates,
Crystal Amber, BMGFT and Dick's pursuant
to their subscription for new ordinary
shares in the Subscription Agreement
Subscription Resolutions Resolutions 1 to 4 set out in the Notice
of General Meeting
Trade Loan the proposed loan of up to GBP15 million
to be made available to the Company by
adidas Group
United Kingdom or the United Kingdom of Great Britain and
UK Northern Ireland
Warrant Shares the 22,712,894 New Ordinary Shares, being
the aggregate number of Ordinary Shares
to be issued to IAML, Harris Associates,
Crystal Amber and BMGFT through the exercise
of the 2011 Warrants
This information is provided by RNS
The company news service from the London Stock Exchange
END
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