JD Sports Regulatory News (JD.)

4 Dec 2007 10:04

John David Group (The) PLC04 December 2007 THE JOHN DAVID GROUP PLC 4 December 2007 Strategic Investment in The Focus Group The John David Group plc (JD), the sports and leisurewear retailer, announcesthat on 3 December 2007 it acquired 49.0% of the entire issued share capital ofFocus Brands Limited (Newco) which is a new company set up for the purposes ofacquiring Focus Group Holdings Limited and its subsidiary companies (FocusGroup) from Michael Gilbert, David Gilbert, David Tolman, Mark Schaffer andTrevor Freeman (the Vendors). The Focus Group was founded in 1976 and has become one of the leading companiesin the UK for the design, sourcing and distribution of branded and own brandfootwear, apparel and accessories. Focus Group holds a number of third partylicences and also designs and sources product from a number of sports andfashion retailers. Immediately prior to this transaction taking place FocusGroup's UK license with Converse has been transferred outside of the FocusGroup. The key employees of the Focus Group are its two founders, Michael Gilbert andDavid Gilbert, together with the Marketing and Design Director, David Tolman,who joined the Focus Group in 1992. All three will continue in their currentoperational roles within the management team of the Focus Group. JD has invested £49,000 by way of share capital and £2.45m by way of loan notesinto Newco with these loan notes carrying a coupon of 1.5% above Barclays Bankbase rate. Pending a refinancing of Newco, JD and the Vendors have guaranteed a £6.5mbridging loan facility in Newco on a several basis with JD liable for 49% ofthis guarantee in line with its shareholding. It is intended that therefinancing will take place shortly after completion. Upon refinancing, it isintended that the guarantee from JD and the Vendors will continue on a severalbasis in the same proportions as the bridging loan facility. Deferred consideration may be payable to the Vendors in the event that theprofit before amortisation and after tax of the Focus Group exceeds certainthresholds in the period to 31 January 2013. The maximum total deferredconsideration that could be payable to the Vendors is approximately £12.4m. The Vendors have also granted JD a call option over the 51.0% of Newco's issuedshare capital which is owned by the Vendors. This option is exercisable by JD atany time after the fifth anniversary of completion of the acquisition. JD has also acquired a sub-licence to 2019 of the Sergio Tacchini brand in theUK from Focus Italy srl, a wholly owned subsidiary of Focus Group HoldingsLimited, with advanced royalties of £4.3m payable in cash. JD has also acquired from the Focus Group a freehold property in St Albans forthe current market valuation of £4m payable in cash. This building has been letback to the Focus Group on a 15 year lease at an initial rental of £320,000,which represents the market rent for the property. For the year ended 31 May 2006, the audited loss before tax of the Focus Groupwas £961,000 and the gross assets were £54,900,000. The directors expect that the investment in Newco will be immediately earningsenhancing to JD. Peter Cowgill, Executive Chairman of JD, said: "We are pleased to announce this investment in the Focus Group, which furtherexpands our unique product and brand offering. By drawing on the managementteam's expertise and proven success in the development of product and brands, weare confident that this investment will bring financial and strategic benefitsin the future." Enquiries: The John David Group Plc Tel: 0161 767 1000 Peter Cowgill, Executive Chairman Brian Small, Finance Director Hogarth Partnership Limited Tel: 0207 357 9477 Andrew Jaques Barnaby Fry Sarah Richardson This information is provided by RNS The company news service from the London Stock Exchange