12 Oct 2009 16:47
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, New Zealand, Switzerland, South Africa and the United Arab Emirates 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.
This Announcement is an advertisement. It is not a prospectus. Investors should not subscribe for or purchase any shares referred to in this Announcement except SOLELY on the basis of information in the prospectus to be published by JJB Sports plc in connection with the proposed Capital Raising. Copies of the prospectus will, following publication, be available from the company's registered office and, OTHER THAN IN CERTAIN JURISDICTIONS, on its CORPORATE website at www.jjbcorporate.co.uk.
12 October 2009
JJB Sports plc
Proposed Firm Placing and Placing and Open Offer to raise approximately £100 million gross proceeds and amended financing arrangments
The Board of Directors of JJB Sports plc ("JJB" or the "Company"), one of the UK's leading sports retailers, announces that it is proposing to raise gross proceeds of approximately £100 million (approximately £94 million net of expenses), through a firm placing and a placing and open offer involving the issue of 400,000,000 New Ordinary Shares at an issue price of 25 pence per New Ordinary Share. In addition, the Board announces proposed amendments to the terms of the Current BoS Facility, conditional on the Company raising net proceeds of at least £25 million from the Capital Raising.
Highlights
Gross proceeds of approximately £100 million (approximately £94 million net of expenses) from the Capital Raising will provide management with greater operational flexibility and, in particular, will allow the Company to reduce its reliance on the availability of supplier credit and provide sufficient working capital to rebuild stock levels into 2010 and will provide necessary funds for the implementation of the Group's redefined "Serious about Sport" strategy.
The Capital Raising will be by way of a Firm Placing and Placing and Open Offer, fully underwritten by Panmure Gordon and Numis.
The Company intends to issue 200,665,488 New Ordinary Shares pursuant to the Placing and Open Offer (comprising approximately 50.2% of the total number of New Ordinary Shares to be issued pursuant to the Capital Raising) and 199,334,512 New Ordinary Shares pursuant to the Firm Placing (comprising the remaining 49.8%).
Issue Price of 25 pence per New Ordinary Share represents a discount of 7.75 pence (23.7%) to the Closing Price of 32.75 pence per Ordinary Share on 9 October 2009 (being the last Dealing Day prior to this Announcement).
Conditional on the Company raising net proceeds of at least £25 million from the Capital Raising, the Board has also agreed amendments with BoS to certain terms of the Current BoS Facility, including an extension of the maturity date from 30 September 2010 to 30 September 2012.
The Capital Raising is conditional on, among other things, the approval of Shareholders at a General Meeting to be held at 11:00 a.m. on 29 October 2009. Details relating to the General Meeting are contained in the Prospectus which it is intended will be posted to Qualifying Shareholders (other than Excluded Shareholders) on 12 October 2009.
Panmure Gordon and Numis are acting as joint broker, joint bookrunner and joint underwriter to the Company. Lazard is acting as financial adviser and sponsor to the Company.
Commenting on the proposed Capital Raising, Sir David Jones, Executive Chairman, said:
"This capital raising represents a new beginning for JJB Sports. This business has been through a great deal but has survived thanks to the strength of its consumer proposition and the dedication of its staff. This fresh capital, together with the amended working capital facility from the Bank of Scotland, will provide the management team with the resources and flexibility it needs to implement the redefined strategy that will revitalise JJB and establish it as the destination for everyone who wants to participate in sport.
With the funds from the capital raising we propose to pay drawn amounts under our amended working capital facility, increase our stock levels, refurbish our existing stores and have the resources to search for new stores in key retail areas. On behalf of the Board I am delighted to put these plans in front of shareholders in the strong belief it will forge our path into the future."
This summary should be read in conjunction with the full text of this Announcement. Appendix I contains an expected timetable of key events. Appendix II contains the definitions of certain terms used in this Announcement.
The Company will be hosting a conference call for analysts and investors at 11:00 a.m. on Tuesday 13 October 2009. Please contact Kerryn Jahme at Maitland on 020 7379 5151 for dial-in details. A presentation will also be available on the Company's corporate website, www.jjbcorporate.co.uk.
A copy of the Prospectus, following publication on or about 12 October 2009, will be available from the registered office of the Company at Martland Park, Challenge Way, Wigan, Lancashire, WN5 0LD and on the Company's corporate website at www.jjbcorporate.co.uk. The Prospectus will also be available for inspection during normal business hours on any weekday (Saturdays, Sundays and public holidays excluded) at the offices of Herbert Smith LLP at Primrose Street, Exchange Square, London, EC2A 2HS.
| For further information, please contact: | |
| JJB Sports plc | +44 (0) 1942 221 400 |
| Sir David Jones | |
| Lawrence Coppock | |
| Richard Manning | |
| Maitland | +44 (0) 20 7379 5151 |
| (PR adviser) | |
| Neil Bennett | |
| Emma Burdett | |
| Lazard | +44 (0) 20 7187 2000 |
| (Financial adviser and sponsor) | |
| Melanie Gee | |
| Aamir Khan | |
| Panmure Gordon | +44 (0) 20 7459 3600 |
| (Joint broker, bookrunner and underwriter) | |
| Richard Gray | |
| Andrew Potts | |
| Numis | +44 (0) 20 7260 1000 |
| (Joint broker, bookrunner and underwriter) | |
| Heraclis Economides | |
| Mark Lander |
Important Notice
This Announcement is not a prospectus but an advertisement and Qualifying Shareholders should not acquire any New Ordinary Shares referred to in this Announcement except on the basis of the information contained in the Prospectus.
Neither the content of JJB's website nor any website accessible by hyperlinks to JJB's website is incorporated in, or forms part of, this Announcement. The distribution of this Announcement, the Prospectus and any other documentation associated with the Capital Raising into jurisdictions other than the United Kingdom may be restricted by law. Persons into whose possession these documents come should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, such documents should not be distributed, forwarded to or transmitted, directly or indirectly, in whole or in part, in or into the United States, Australia, Canada, Japan, New Zealand, Switzerland, South Africa and the United Arab Emirates.
No action has been taken by JJB or any other person that would permit an offer of the New Ordinary Shares or possession or distribution of this Announcement, the Prospectus or any other documentation or publicity material or the Application Forms in any jurisdiction where action for that purpose is required, other than in the United Kingdom.
The New Ordinary Shares have not been and will not be registered under the US 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, within the United States except in reliance on an exemption from the registration requirements of the US 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 New Ordinary Shares in the United States. The New Ordinary Shares are being offered and sold outside the US in reliance on Regulation S under the US Securities Act. The New Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Ordinary Shares or the accuracy or adequacy of the Application Form or this document. Any representation to the contrary is a criminal offence in the US.
The New Ordinary Shares have not been and will not be registered under the relevant laws of any state, province or territory of any of the Excluded Territories and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within any Excluded Territory except pursuant to an applicable exemption from registration requirements. There will be no public offer of New Ordinary Shares in Australia, Canada, Japan, New Zealand, Switzerland, South Africa and the United Arab Emirates.
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 of New Ordinary Shares. 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.
This Announcement has been issued by, and is the sole responsibility of, the Company. No person has been authorised to give any information or to make any representations other than those contained in this Announcement and, if given or made, such information or representations must not be relied on as having been authorised by JJB or any of the Banks. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules, the issue of this Announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Group since the date of this Announcement or that the information contained in it is correct at any subsequent date.
Lazard, Panmure Gordon and Numis, who are authorised and regulated in the UK by the Financial Services Authority, are acting for JJB and no one else in connection with the Capital Raising and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the Capital Raising and will not be responsible to anyone other than JJB for providing the protections afforded to their respective clients or for providing advice in relation to the Capital Raising or any matters referred to in this Announcement.
Apart from the responsibilities and liabilities, if any, which may be imposed on Lazard by the Financial Services and Markets Act 2000, none of Lazard, Panmure Gordon and Numis accepts any responsibility whatsoever for the contents of this Announcement, and makes no representation or warranty, express or implied, for the contents of this Announcement, including its accuracy, completeness or verification, or for any other statement made or purported to be made by it, or on its behalf, in connection with JJB or the New Ordinary Shares or the Capital Raising, and nothing in this Announcement is or shall be relied upon as, a promise or representation in this respect whether as to the past or future. Each of Lazard, Panmure Gordon and Numis accordingly disclaims to the fullest extent permitted by law all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this Announcement or any such statement.
No statement in this Announcement is intended to be a profit forecast and no statement in this Announcement should be interpreted to mean that earnings per share of JJB for the current or future financial years would necessarily match or exceed the historical published earnings per share of JJB.
This Announcement includes statements that are, or may be deemed to be, "forward looking statements". These forward looking statements can be identified by the use of forward looking terminology, including the terms "believes", "projects", "estimates", "anticipates", "expects", "intends", "plans", "goal", "target", "aim", "may", "will", "would", "could", "should" or "continue" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include all matters that are not historical facts. They appear in a number of places throughout this Announcement and include statements regarding the intentions, beliefs or current expectations of the Directors, the Company or the Group concerning, among other things, the Company's financial position and projections, business plan, financial model and future covenant ratios and compliance, the results of operations, prospects, growth, strategies and dividend policy of the Group and the industry in which it operates.
By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond the Company's ability to control or predict. Forward looking statements are not guarantees of future performance. The Company's or the Group's actual financial performance, results of operations, dividend policy and the development of the industry in which it operates may differ materially from the impression created by the forward looking statements contained in this Announcement. In addition, even if the financial performance, results of operations and dividend policy of the Company or the Group (as the case may be), and the development of the industry in which it operates, are consistent with the forward looking statements contained in this Announcement, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause these differences include, but are not limited to: the effect of the Capital Raising on the Group; the Group's ability to generate growth or profitable growth; the Group's ability to generate sufficient cash over the longer term to service its debt; the Group's ability to control its capital expenditure and other costs; changes in the competitive framework in which the Group operates and its ability to retain market share; industry trends; general local and global economic, political, business and market conditions; significant changes in exchange rates, interest rates and tax rates; significant technological and market changes; future business combinations or dispositions; changes in government and other regulation, including in relation to the environment, health and safety and taxation; labour relations and work stoppages; and changes in business strategy or development plans. More detailed information on the potential factors which could affect the financial results of the Group is contained in the Group's public filing and reports.
The forward looking statements contained in this document speak only as of the date of this Announcement. Other than in accordance with their legal or regulatory obligations (including under the Listing Rules and/or the Prospectus Rules and/or the Disclosure and Transparency Rules) and as required by the FSA, the London Stock Exchange or the City Code, neither of the Company or the Banks undertakes any obligation to update or revise publicly any forward looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward looking statements attributable to the Group or individuals acting on behalf of the Group are expressly qualified in their entirety by this paragraph. Prospective investors should specifically consider the factors identified in this document which could cause actual results to differ before making an investment decision.
This document should not be considered a recommendation by the Company, the Banks or any of their respective directors, officers, employees, advisers or any of their respective affiliates, parent undertakings, subsidiary undertakings or subsidiaries of their parent undertakings in relation to any purchase of or subscription for the New Ordinary Shares. Price and volumes of, and income from, securities may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. You are advised to read this document and, once available, the Prospectus and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect the Group's future performance and the industry in which it operates. Persons needing advice should consult an independent financial adviser
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, New Zealand, Switzerland, South Africa and the United Arab Emirates AND SHOULD NOT BE DISTRIBUTED IN, FORWARDED TO OR TRANSMITTED INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL APPLICABLE SECURITIES LAWS OR REGULATIONS.
This Announcement is an advertisement. It is not a prospectus. Investors should not subscribe for or purchase any shares referred to in this Announcement except solely on the basis of information in the prospectus to be published by JJB Sports plc in connection with the proposed Capital Raising. Copies of the prospectus will, following publication, be available from the company's registered office and, OTHER THAN IN CERTAIN JURISDICTIONS, on its CORPORATE website at www.jjbcorporate.co.uk.
12 October 2009
JJB Sports plc
Proposed Firm Placing and Placing and Open Offer to raise approximately £100 million gross proceeds and amended financing arrangments
1. Introduction
The Board of Directors of JJB Sports plc ("JJB" or the "Company"), one of the UK's leading sports retailers, has today announced that it is proposing to raise approximately £94 million, net of expenses, through the issue of 400,000,000 New Ordinary Shares at an issue price of 25 pence per New Ordinary Share, a discount of 23.7% to the closing mid-market price on 9 October 2009. 199,334,512 New Ordinary Shares will be issued through the Firm Placing and 200,665,488 New Ordinary Shares will be issued through the Placing and Open Offer. Conditional on the Company raising net proceeds of at least £25 million from the Capital Raising, the Board has also agreed amendments with BoS to certain terms of the Current BoS Facility, including an extension of the maturity date from 30 September 2010 to 30 September 2012.
The Capital Raising is conditional on, among other things, the approval of the Share Issue Resolution by Shareholders at a General Meeting to be held at 11:00 a.m. on 29 October 2009 at the head office of the Company, Martland Park, Challenge Way, Wigan, Lancashire, WN5 0LD. The Notice of General Meeting is set out at the end the Prospectus. Shareholder approval is required for the implementation of the Capital Raising in the manner described in the Prospectus, the removal of the limitation on the Company's authorised share capital in line with the Companies Act 2006, the granting of authority to allot and issue the New Ordinary Shares and the discounted Issue Price.
The Directors unanimously recommend that Shareholders vote in favour of the Resolutions.
2. Background to and reasons for the Capital Raising
The Board spent the first half of 2009 implementing a restructuring and refinancing plan to save the Company from near-certain administration and to provide a platform to secure the longer term future of the Group. The Group's two loss-making leisure footwear subsidiaries, OSC and Qube, were placed into administration in February 2009, the Company disposed of its Fitness Clubs Business to DW Sports for £83.4 million in March 2009 and the Company announced details of its proposed company voluntary arrangements and the terms of a short term banking facility with Barclays and a medium term revolving facility with BoS in early April 2009. Following the successful implementation of the company voluntary arrangements in May 2009, the Company was able to draw down on the Barclays Facility (which it has subsequently repaid in full) and the Initial BoS Facility in June 2009.
On 23 September 2009, in connection with the publication of its 2009 Interim Report, the Company agreed amendments to the Initial BoS Facility and entered into the Current BoS Facility (such amendments were effective immediately and were not conditional on the Capital Raising proceeding). Pursuant to the terms of the Current BoS Facility, BoS agreed to increase the facility limit from £25 million to £35 million and amended the existing financial covenants. Whilst the terms of these covenants are more favourable than those contained in the Initial BoS Facility, the Current BoS Facility continues to contain terms that are more limited than those that would normally be expected for a standard working capital facility and there is a risk that a relatively small deterioration in the Group's current trading performance or timing for the anticipated receipt of certain cash proceeds could trigger a breach of the Current BoS Facility. Accordingly, in the Group's financial statements for the 26 weeks ended 26 July 2009 (published on 24 September 2009), the Group's auditors, Deloitte, once again reported the existence of a number of material uncertainties that could cast significant doubt over the ability of the Group and the Company to continue as a going concern.
If the Capital Raising does not proceed, the Company will be dependent on the Current BoS Facility that matures on 30 September 2010. The Group does not currently anticipate a funding shortfall or breach of the financial covenants in the Current BoS Facility, in the period up to and including 30 September 2010. However, if the Capital Raising does not proceed and if (i) there is a relatively small deterioration in the Group's current trading performance; (ii) the Company does not receive the outstanding deferred consideration from the disposal of the Fitness Clubs Business of £2.4 million by the end of October 2009; or (iii) cannot agree the sale of the Slazenger Brand or can agree the terms of the disposal of the Scheme brand but the proceeds of such disposal are less than expected, or not received by the Company by the end of October 2009, the Directors believe that it is likely that the Group will have a funding shortfall and breach the headroom covenant in the Current BoS Facility as early as the end of October 2009. Furthermore, if there is a relatively small deterioration in the Group's current trading performance, the Directors believe that it is likely that the Group will breach the operating margin covenant in the Current BoS Facility as early as the end of October 2009 (or on subsequent testing dates at the end of January 2010 or April 2010). If the Group was to breach either the headroom covenant or the operating covenant (i.e. the financial covenants) in the Current BoS Facility, such breach would constitute an event of default under the same and would entitle BoS to demand immediate repayment of all outstanding amounts, cancel the Current BoS Facility and to take steps to enforce its security over the Group's assets. The Directors believe that, in these circumstances, it is likely that the Group would go into administration.
The Directors have not yet held any substantive discussions with BoS in connection with their continued support beyond the maturity date of the Current BoS Facility if the Capital Raising does not proceed. However, if the Capital Raising does not proceed under the terms of the Current BoS Facility, the Company is obliged to hold such discussions with BoS in January 2010. Furthermore, in order for the Company to prepare and finalise the accounts for the financial year ending January 2010 on a going concern basis, the Company will need to have agreed longer term financing for the Group by no later than the end of May 2010. If alternative financing cannot be agreed by May 2010, the Company would need to agree such financing by September 2010 to enable the Company to repay the Current BoS Facility on its maturity.
If the Capital Raising does not proceed, and if the Group experiences a funding shortfall and/or breach of its financial covenants the Directors would take immediate steps at the appropriate time but given there have been no substantive discussions with BoS or other providers of debt or equity financing at this time, there can be no guarantee that such steps would be sufficient for the Company's purposes.
In order to provide the Group with longer term financial stability beyond the maturity date of the Current BoS Facility and with the ability to begin the implementation of its redefined "Serious about Sport" strategy, the Board concluded that the best action to take was to negotiate further amendments relating to certain key terms of the Current BoS Facility (so that the terms are more consistent with a standard working capital facility) and to agree an extension to the maturity of the facility to September 2012 and to raise additional equity capital.
Accordingly, the Board has reached agreement with BoS regarding amendments to the Current BoS Facility and has announced details of the Capital Raising. The proceeds of the Capital Raising will allow the Company to pay down the total amount drawn under the Current BoS Facility, thus creating increased headroom and available working capital. This increased headroom will provide management with greater operational flexibility and, in particular, allow the Company to reduce its reliance on the availability of supplier credit and enable the Company to increase its stock levels into 2010.
In addition, the proceeds of the Capital Raising will also provide the necessary funds to allow the Company to implement the first two phases of the Group's redefined "Serious about Sport" strategy, further details of which are set out in the Prospectus. The implementation of the strategy will broadly take place in three phases and the Directors intend on implementing the first two phases over the next two years. In the next six months, the Company intends to focus on its core operations and business with a view to rebuilding stock levels, increasing product ranges and remerchandising stores, motivating sales staff, testing the new store layout (i.e. relaying some of the Group's stores) and developing the Group's internet offering including the introduction of a new website with integrated customer ordering through the internet, telephone or in store (with the option to pick up or 24 hour home delivery).
During 2010 through until mid 2011, the Company intends to focus on recovering profitability through the refurbishment of 30 key stores, the relaying of the balance of the Group's stores, the addition of up to 30 new stores (20 by January 2011 and a further 10 during that year), improving in-store productivity, targeted internet sales growth to at least 5% of turnover, investigating and addressing loss making stores, capitalising on England's qualification for the football World Cup and introducing a home shopping offer through a mail order catalogue. Finally, beyond mid 2011, the Company intends to focus on development of the business through continuing the Group's store refurbishment program and the potential addition of up to 20 new stores per annum (with the majority in the South East and London). During this final phase, the Company also intends on continuing to develop internet sales and marketing and preparing a major marketing campaign to build up to the 2012 Olympic Games.
3. Use of Proceeds
The net proceeds of the Capital Raising of approximately £94 million will first be used to pay down the total amount drawn under the Amended BoS Facility (such amounts which have been repaid will remain available to be redrawn in accordance with the terms of the Amended BoS Facility). As at 4 October 2009 (being the last practicable date prior to the publication of this Announcement) the amount drawn under the Current BoS Facility was £27.5 million. On the assumption that this amount does not change in a material respect, the remainder of the net proceeds of the Capital Raising in the amount of £66.5 million will be credited to cash on the Group's balance sheet.
The Directors believe that following the Capital Raising, the Group's cash and undrawn committed financing facilities will provide management with greater operational flexibility and, in particular, will allow the Company to reduce its reliance on the availability of supplier credit and provide sufficient working capital to rebuild stock levels into 2010. In addition, the Directors believe that the Capital Raising will provide the necessary funds for the implementation of the Group's redefined "Serious about Sport" strategy as follows:
development of the Group's internet offering, including its website and associated marketing, during the fourth quarter of 2009 and into the first quarter of 2010 to take full advantage of this method of shopping when stock levels improve in the first quarter of 2010 at a total cost of approximately £5 million;
a complete refurbishment and new store layout in 30 key stores by mid 2011 at a total cost of approximately £15 million;
relaying the remaining store portfolio with the new store layout by mid 2011 at a total cost of approximately £5 million; and
the fitting and opening of up to 20 new stores by January 2011 and a further 10 during 2011 at a total cost of approximately £24 million.
4. Management and internal controls
In addition to the financial restructuring of the Group in the first half of 2009, there have been a number of changes to the executive management team and Non-executive Directors during this year. The Board has been strengthened through the appointment of a new senior independent Non-executive Director and the Company has made significant progress in implementing enhanced internal controls following weaknesses identified in the 2009 Annual Report including, among others, establishing an internal audit function.
As noted in the 2009 Interim Report, the Board is continuing the process of looking to appoint a full time Chief Executive and is currently interviewing candidates. Following the appointment of a new Chief Executive, it is intended that Sir David Jones will continue as Chairman on a part-time basis. In addition, the Board is currently interviewing for three additional Non-executive Directors.
5. "Serious about Sport" strategy
The Group comprises 251 JJB branded retail stores in the UK and Ireland and employs approximately 6,350 people. The majority of the Group's stores are based on the superstore concept and are generally out of town or larger high street stores.
The Directors believe that the Group has a number of strengths that will allow them further to develop the business and implement the proposed strategy. These strengths include a diverse geographical spread of stores creating a "national footprint" (other than the South East of the UK, in particular within the M25), established relationships with suppliers of key global brands, strong brand recognition and product portfolio and dedicated and knowledgeable store managers and employees.
The Board's focus is on redefining the "Serious about Sport" strategy to create a national chain of "independent sports retailers" focussed on sport rather than fashion and good value rather than discounting. This strategy is developed around the following key components:
anchoring the strategy on global brands including particularly Nike and Adidas, supplemented by an own brand offer of Champion, Patrick and Olympus;
increasing the range of sports accessories so that all popular UK sports are covered and becoming the destination store for everyone buying sports related products;
clearly defined merchandise with a sporting aspect;
add-on products complementing the core sports offering;
products targeted at all demographics and to all ages with comprehensive size ranges;
broadening customer accessibility through existing stores, planned new stores and further development of the internet offering;
broader product range available through the internet supporting the more serious sports enthusiast;
marketing in-store by leveraging off global brands and major sporting events; and
in-store promotions supporting local events.
The Company intends that the Group's redefined "Serious about Sport" strategy will be implemented in three phases, the first two phases through to mid 2011.
6. Key terms and conditions of the Amended BoS Facility
The Company has reached agreement with BoS with respect to a revision of key terms of the Current BoS Facility to provide the Group with greater flexibility in respect of the key covenants and certainty with a longer term, conditional on the BoS Capital Raising Condition. Apart from satisfying the BoS Capital Raising Condition and other conditions which are entirely within the control of the Group (which cannot be satisfied by their nature until the date on which the amendments take effect), the Company has satisfied all conditions to the Amended BoS Facility.
The key terms of the amendments agreed with BoS, further details of which are set out in the Prospectus, are as follows:
the maturity date of the facility will be extended from 30 September 2010 to 30 September 2012;
the key financial covenants for the facility will be amended to provide greater headroom until the end of the new term and now comprise (a) a fixed charge cover increasing from 1.1:1 to 1.5:1 during the life of the Amended BoS Facility; (b) interest cover (ratio of EBITDA to Net Debt Costs) of 7:1 and from 30 April 2011 a ratio of EBIT to Net Debt Costs of 4:1; and (c) leverage (ratio of Net Debt to EBITDA) of 1.75:1;
testing of these new financial covenants will begin on 31 January 2010. Starting with that quarter, all financial covenants will be tested on each subsequent quarter initially on a 3 month, 6 month, 9 month and 12 month basis. From October 2010, the financial covenants will then be calculated quarterly on a rolling 12 month basis. All financial covenants will be calculated in accordance with IFRS as adjusted for covenant purposes;
the initial margin over LIBOR in respect of the Amended BoS Facility will be 3.5% per annum until 12 months following the date when the Amended BoS Facility becomes effective and thereafter will be in a range of 3.5% to 2.5% per annum, depending on the fixed charge cover ratio;
the facility limit will be reduced from £35 million to £25 million; and
as part of the amendments, the Company will pay upfront fees equivalent to £250,000.
7. Key terms and conditions of the Capital Raising
The Board proposes to raise approximately £94 million, net of expenses, through the Capital Raising by the issue of New Ordinary Shares at an issue price of 25 pence per New Ordinary Share, a discount of 7.75 pence (23.7%) to the closing mid-market price on 9 October 2009. 199,334,512 New Ordinary Shares will be issued through the Firm Placing and 200,665,488 New Ordinary Shares will be issued through the Placing and Open Offer.
In setting the Issue Price, the Directors have considered the price at which the New Ordinary Shares need to be offered to investors to ensure the success of the Capital Raising and raise significant equity compared with the current market capitalisation of the Company. The Directors believe that both the Issue Price and the discount are appropriate.
Principal Terms of the Placing and Open Offer
The Issue Price of 25 pence per New Ordinary Share represents a discount of 7.75 pence (23.7%) to the Closing Price of 32.75 pence per Ordinary Share on 9 October 2009 (being the last Dealing Day prior to announcement of the Capital Raising). The Placing and Open Offer is expected to raise approximately £50.2 million before expenses.
Under the terms of the Placing and Open Offer, Qualifying Shareholders (other than Excluded Shareholders) will be given the opportunity to apply for the Open Offer Shares at the Issue Price, pro rata to their holdings of Existing Ordinary Shares on the Record Date, on the basis of:
4 Open Offer Shares for every 5 Existing Ordinary Shares
Qualifying Shareholders (other than Excluded Shareholders) are also being given the opportunity, provided they take up their Open Offer Entitlement in full, to apply for Excess Shares through the Excess Application Facility, up to a maximum number of Excess Shares equal to 0.79 times the number of Ordinary Shares held in such Qualifying Shareholder's name as at the Record Date.
Fractions of Open Offer Shares will not be allotted to Qualifying Shareholders in the Open Offer and fractional entitlements in the Open Offer will be rounded down to the nearest whole number of Open Offer Shares. The aggregate number of Open Offer Shares available for subscription pursuant to the Open Offer will not exceed 200,665,488 New Ordinary Shares.
Qualifying Shareholders (other than Excluded Shareholders) may apply for any whole number of Open Offer Shares up to their maximum entitlement, which in the case of Qualifying Non-CREST Shareholders, is equal to the number of Open Offer Entitlements as shown in Box 7 on their Application Form, or, in the case of Qualifying CREST Shareholders, is equal to the number of Open Offer Entitlements standing to the credit of their stock accounts in CREST.
Application Forms are expected to be despatched to Qualifying Non-CREST Shareholders on 12 October 2009 and Qualifying CREST Shareholders are expected to receive a credit to their appropriate stock accounts in CREST in respect of their Open Offer Entitlements at 8:00 a.m. on 14 October 2009. Qualifying Shareholders with holdings of Existing Ordinary Shares in both certificated and uncertificated form will be treated as having separate holdings for the purpose of calculating their entitlements under the Open Offer, as will Qualifying Shareholders with holdings under different designations or in different accounts.
The Conditional Placees have agreed to subscribe for Open Offer Shares pursuant to the Placing, subject to clawback to satisfy valid applications by Qualifying Shareholders pursuant to the Open Offer.
The Placing and Open Offer is fully underwritten by Panmure Gordon and Numis pursuant to the Placing Agreement, further details of which are set out in the Prospectus. Pursuant to the Placing Agreement, Lazard has been appointed as sponsor and Panmure Gordon and Numis have been appointed as joint brokers, joint bookrunners and joint underwriters of the Capital Raising.
Application has been made for the Open Offer Shares and Excess CREST Open Offer Entitlements to be admitted to CREST. It is expected that the Open Offer Entitlements and Excess CREST Open Offer Entitlements will be admitted to CREST at 8:00 a.m. on 14 October 2009. The Open Offer Entitlements and Excess CREST Open Offer Entitlements will also be enabled for settlement in CREST at 8:00 a.m. on 14 October 2009. Applications through the CREST system may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.
Qualifying CREST Shareholders should note that, although the Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of entitlements under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. Qualifying Non-CREST Shareholders should note that their Application Form is not a negotiable document and cannot be traded.
The Placing and Open Offer is conditional, amongst other things, upon passing of the Share Issue Resolution at the General Meeting and Admission of the New Ordinary Shares occurring by no later than 9:00 a.m. on 3 November 2009 (or such later time and/or date as the Company, Panmure Gordon and Numis may determine).
If Admission does not take place on or before 9:00 a.m. on 3 November 2009 (or such later time and/or date as the Company, Panmure Gordon and Numis may determine), the Open Offer will lapse, any Open Offer Entitlements admitted to CREST will thereafter be disabled and application monies under the Open Offer will be refunded to the applicants, by cheque (at the applicant's risk) in the case of Qualifying Non-CREST Shareholders and by way of a CREST payment in the case of Qualifying CREST Shareholders, without interest as soon as practicable thereafter. In these circumstances, the Placing to the Conditional Placees will not proceed.
Application will be made to the UKLA for the Open Offer Shares to be admitted to the Official List and to the London Stock Exchange for the Open Offer Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective on 3 November 2009 and that dealings for normal settlement in the Open Offer Shares will commence at 8:00 a.m. on 3 November 2009.
Any Qualifying Shareholder who has sold or transferred all or part of his or her registered holding(s) of Ordinary Shares prior to 8:00 a.m. on 13 October 2009 is advised to consult his or her stockbroker, bank or other agent through or to whom the sale or transfer was effected as soon as possible since the invitation to apply for Open Offer Shares may be a benefit which may be claimed from him or her by the purchasers under the rules of the London Stock Exchange.
The Open Offer Shares, when issued and fully paid, will be identical to and rank in full for all dividends or other distributions declared, made or paid after Admission and in all respects will rank pari passu with the Existing Ordinary Shares. No temporary documents of title will be issued.
The commitments of the Conditional Placees are subject to clawback in respect of valid applications for Open Offer Shares by Qualifying Shareholders pursuant to the Open Offer. Further information in relation to the Open Offer and the terms and conditions on which it is made are set out in the Prospectus.
Excess Application Facility
The Excess Application Facility will enable Qualifying Shareholders (other than Excluded Shareholders), provided they take up their Open Offer Entitlement in full, to apply for Excess Shares through the Excess Application Facility, up to a maximum number of Excess Shares equal to 0.79 times the number of Ordinary Shares held in such Qualifying Shareholder's name as at the Record Date, subject to availability.
Qualifying Non-CREST Shareholders who wish to apply to acquire more than their Open Offer Entitlement should complete the relevant sections on the Application Form. Qualifying CREST Shareholders will have Excess CREST Open Offer Entitlements credited to their stock account in CREST.
If applications under the Excess Application Facility are received for more than the total number of Open Offer Shares available following take up of Open Offer Entitlements, such applications will be scaled back pro rata to the number of Excess Shares applied for by Qualifying Shareholders under the Excess Application Facility.
The aggregate number of Open Offer Shares available for acquisition pursuant to the Open Offer will not exceed 200,665,488 New Ordinary Shares.
Principal Terms of the Firm Placing
The Company is proposing to issue 199,334,512 New Ordinary Shares pursuant to the Firm Placing. The Firm Placing is fully underwritten by Panmure Gordon and Numis pursuant to the Placing Agreement.
The Firm Placed Shares are not subject to clawback and do not form part of the Open Offer. The Firm Placing is expected to raise approximately £49.8 million before expenses. The Firm Placing is subject to the same conditions and termination rights that apply to the Placing and Open Offer.
The Firm Placing and the Placing and Open Offer are inter-conditional and conditional, among other things, on Shareholder approval, which will be sought at the General Meeting.
Application will be made to the UK Listing Authority for the Firm Placed Shares to be admitted to the Official List and to the London Stock Exchange for the Firm Placed Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective on 3 November 2009 and that dealings for normal settlement in the Firm Placed Shares will commence at 8:00 a.m. on 3 November 2009.
The Firm Placed Shares, when issued and fully paid, will be identical to, and rank in full with, the Ordinary Shares for all dividends or other distributions declared, made or paid after Admission and will rank pari passu in all respects with the Existing Ordinary Shares as at the date of issue.
8. Structure of the Capital Raising
In structuring the Capital Raising, the Directors have had regard, inter alia, to the current market conditions, the level of the Company's share price and the importance of pre-emption rights to Shareholders. After considering these factors, the Directors have concluded that the Placing and Open Offer and the Firm Placing is the most suitable option available to the Company and its Shareholders. The Open Offer component of the fundraising provides an opportunity for all Qualifying Shareholders (other than Excluded Shareholders) to participate by subscribing for Open Offer Shares pro rata to their current holding of Ordinary Shares.
The Capital Raising has been structured in a way that is expected to have the effect of realising distributable reserves approximately equal to the net proceeds of the Capital Raising less the par value of the New Ordinary Shares issued by the Company. The Company and Numis have agreed to subscribe for ordinary shares in Cove Capital (Jersey) Limited, a company majority-owned by the Company. Numis will pay monies that it receives from Placees and the Receiving Agent will pay monies that it receives from Qualifying Shareholders, in each case taking up New Ordinary Shares under the Capital Raising, to an account, set up specifically for the purpose, with the Receiving Agent, which proceeds, after commissions have been deducted and provided certain conditions are met, will be used to subscribe for redeemable preference shares in Cove Capital (Jersey) Limited.
In addition, the Company will allot and issue the New Ordinary Shares on a non-pre-emptive basis to those persons entitled thereto, including the participants in the Placing and Qualifying Shareholders taking up their entitlements under the Open Offer, in consideration of Numis transferring its holdings of ordinary shares and redeemable preference shares in Cove Capital (Jersey) Limited to the Company. Accordingly, instead of receiving cash as consideration for the issue of the New Ordinary Shares, at the conclusion of the Capital Raising the Company will own the entire issued share capital of Cove Capital (Jersey) Limited whose only asset will be its cash reserves, which will represent an amount approximately equal to the net proceeds of the Capital Raising. The Company will be able to utilise this amount by redeeming the redeemable preference shares it holds in Cove Capital (Jersey) Limited and, during any interim period prior to redemption, by procuring that Cove Capital (Jersey) Limited lends or dividends the amount to the Company. This procedure is governed by the Subscription and Transfer Deed and the Initial Subscription and Put and Call Option Agreement, summaries of which are set out in the Prospectus.
The realisation of distributable reserves is expected to facilitate any future return of value to Shareholders.
9. Effect of the Capital Raising
Upon completion of the Capital Raising, the New Ordinary Shares will represent approximately 159.5% of the Company's Existing Issued Share Capital and approximately 61.5% of the Company's Enlarged Issued Share Capital. New Ordinary Shares issued through the Placing and Open Offer and New Ordinary Shares issued through the Firm Placing will account for approximately 50.2% and 49.8%, respectively, of the total New Ordinary Shares to be issued. The Share Issue Resolution set out in the Notice of General Meeting must be passed in order for the Capital Raising to proceed.
Following the issue of the New Ordinary Shares to be allotted pursuant to the Capital Raising, Qualifying Shareholders who take up their full entitlements in respect of the Open Offer (without making any application under the Excess Application Facility) will experience a dilution of 30.6% of their interests in the Company as a result of the Firm Placing. Qualifying Shareholders who are not eligible to or do not take up any of their entitlements in respect of the Open Offer will experience a greater dilution of approximately 61.5% of their interests in the Company as a result of the Firm Placing and the Open Offer.
Qualifying Shareholders should note that the Open Offer is not a rights issue. In the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market on behalf of, or placed for the benefit of, Qualifying Shareholders who are not eligible to or do not apply under the Open Offer but will be issued to Placees for the benefit of the Company.
10. Current trading and prospects
As noted in the 2009 Interim Report, the continuing and growing decline seen in the Company's like-for-like sales performance for stores trading more than 52 weeks (excluding the impact of the sales period in late June/early July) during the first half of 2009 is reversing. In addition, gross margins are improving during this year (excluding the impact of the sales period in late June/early July) with the underlying margin for all stores (including those part of the Fitness Clubs Business up to the date of the disposal, clearance stores and head office sales) returning to previous year levels.
The like-for-like sales for the period between 27 July 2009 and 20 September 2009 were minus 32.2%. The like-for-like sales for ongoing retail have steadily improved since the end of the first half year. Like-for-like sales for the four week period to 23 August 2009 were minus 36.7% whilst the like-for-like for the next four weeks (i.e. the four week period to 20 September 2009) were minus 27.6%. Gross margin over the same period improved to over 47%. Gross margin for the period between 27 July 2009 and 20 September 2009 was 49.5% (excluding clearance stores) and 46.4% (including clearance stores). The level of stock between the same period increased by £10.5 million to £61.0 million of stock at 20 September 2009.
Net funds at 26 July 2009 amounted to £2.1 million compared to a net debt of £57.6 million at 27 July 2008 and a net debt of £34.4 million at 25 January 2009. Net debt at 4 October 2009 (being the last practicable date prior to the date of this Announcement) was £22.1 million.
As noted in the 2009 Interim Report, the Company has also undertaken minor refits in 32 stores since mid 2009 and early results are encouraging. The average purchases per transaction are above the remainder of the stores, but the full benefit of these refits will not be seen until improvements in stock holding are received.
The Directors are encouraged by the level of support received from the Group's suppliers, employees, investors, lender and advisors. The Directors remain extremely cautious about the remainder of the financial year and do not expect to see a significant improvement in stock levels or quality before the beginning of 2010, and do not expect to see any consequential improvement in the Group's performance until 2010/11.
11. Regulatory investigations
As announced on 10 September 2009, the Company is assisting the OFT with an investigation it is carrying out in the sports retail market, following an approach the Company made to the OFT on 30 January 2009 for immunity pursuant to the OFT's leniency programme. On 24 August 2009, the OFT confirmed the grant of a marker for "Type A" immunity in favour of the Company in respect of the suspected cartel activity in the period from 8 June 2007 to 25 March 2009. OFT officers visited the Company's offices in Wigan on 10 and 11 September 2009 as part of this investigation. If the OFT were to complete its investigation, decide that the Company has infringed UK competition law under the Competition Act 1998 and/or Enterprise Act 2002 and issue an infringement decision, the grant of the marker in favour of the Company means that it would receive full immunity from any financial penalty that would otherwise be imposed by the OFT, subject to the Company complying with the OFT's standard conditions for immunity.
In addition, as noted in the 2009 Interim Report, the SFO made public statements on 10 September 2009 that it is investigating the activities of the Company and Sports Direct in connection with suspected offences under the Fraud Act 2006 and the Enterprise Act 2002. The Company has contacted the SFO directly regarding its public statements and the SFO has confirmed that its investigation is focused on the activities of certain individuals (who, for the avoidance of doubt, do not currently include the Directors or current officers of the Company) rather than the Company.
12. Dividend policy
No interim dividend was paid during the financial year ended 25 January 2009 and the Directors did not recommend a final dividend for the period. There is an intention to return to paying a dividend when the Company has sufficient distributable reserves to enable it to do so and the Directors believe it is financially prudent to do so. The Company will be restricted from making any dividend payments at any time during which a default under the Amended BoS Facility is continuing or if a default would occur as a result of making a dividend distribution.
13. Effect of the Capital Raising on the Share Schemes and proposed new award under the 2006 Long Term Incentive Plan and payment of special bonus
The Directors will consider whether adjustments may be made to options and awards as a result of the Capital Raising and to take account of the Open Offer (subject, where appropriate, to auditor and HMRC approval). Participants in the Share Schemes will be advised separately if any adjustment will be available.
The Remuneration Committee has resolved that each of the Executive Directors should be paid a one-off special bonus of £100,000 upon completion of the Capital Raising in recognition of the significant additional individual contribution they will each have made in relation to the Capital Raising and its success and the benefits the Capital Raising will bring to the Group. Going forwards, in order to align the interests of the Executive Directors with the Company's other stakeholders in the turnaround of the Group's retail business and implementation of the Group's redefined "Serious about Sport" strategy, it is proposed that an award under the 2006 Long Term Incentive Plan be made to the current Executive Directors immediately following the Capital Raising.
14. General Meeting of Shareholders
The Capital Raising is conditional on, among other things, the approval of Shareholders at a General Meeting to be held at 11:00 a.m. on 29 October 2009 at the head office of the Company, Martland Park, Challenge Way, Wigan, Lancashire, WN5 0LD.
Shareholder approval is required for the increase in the Company's share capital to create sufficient New Ordinary Shares, the granting of authority to allot and issue the New Ordinary Shares on a non-pre-emptive basis and the discounted Issue Price. In addition, it is proposed that the Company's Articles are amended to allow for the removal of the limitation on the Company's authorised share capital in line with the Companies Act 2006.
Details relating to the General Meeting are contained in the Prospectus which it is intended will be posted to Qualifying Shareholders (other than Excluded Shareholders) on 12 October 2009.
15. Directors' intentions
Each of the Directors who currently has a beneficial holding in the Company intends to take up his Open Offer Entitlements in full. In addition, given the Company has been in a closed period throughout most of its refinancing and restructuring, the Directors have not had an opportunity to invest in the Company. Certain Directors have indicated an intention to invest, in aggregate, up to £550,000 in Ordinary Shares at the earliest possible opportunity following the announcement of the Capital Raising.
Following the Capital Raising, the Directors will beneficially own, in aggregate, approximately 0.09% of the Enlarged Issued Share Capital (excluding any Excess Shares applied for by the Directors under the Excess Application Facility and any market purchases made after the announcement of Capital Raising).
16. Further information
Further details relating to the Capital Raising will be contained in the Prospectus that is expected to be published on 12 October 2009. After that date, copies of the Prospectus and the proposed amendments to the Articles will be available for inspection at the registered office of the Company at Martland Park, Challenge Way, Wigan, Lancashire WN5 0LD during normal business hours on any Business Day. Copies will also be available for download from the Company's corporate website, www.jjbcorporate.co.uk.
The Prospectus and the proposed amendments to the Articles will also be available for inspection during normal business hours on any weekday (Saturdays, Sundays and public holidays excluded) at the offices of Herbert Smith LLP at Primrose Street, Exchange Square, London, EC2A 2HS.
Copies of the Prospectus, the Notice of General Meeting and the proxy form for the General Meeting will also be available for inspection at the UK Listing Authority's Document Viewing Facility situated at the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.
Appendix I: Expected Timetable of Key Events
| Event | 2009 |
| Record Date for Open Offer Entitlements | close of business on 8 October |
| Announcement of the Capital Raising | 12 October |
| Despatch of the Prospectus, Forms of Proxy and Application Forms to Qualifying Non-CREST Shareholders | 12 October |
| Ex-entitlement date for the Open Offer | 8:00 a.m. on 13 October |
| Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to stock accounts of Qualifying CREST Shareholders in CREST | 8:00 a.m. on 14 October |
| Recommended latest time for withdrawing Open Offer Entitlements and Excess CREST Open Offer Entitlements from CREST | 4:30 p.m. on 21 October |
| Latest time and date for depositing Open Offer Entitlements and Excess CREST Open Offer Entitlements into CREST | 3:00 p.m. on 22 October |
| Latest time and date for splitting Application Forms (to satisfy bona fide market claims only) | 3:00 p.m. on 23 October |
| Latest time and date for receipt of Forms of Proxy and receipt of electronic proxy appointments by registered Shareholders for the General Meeting | 11:00 a.m. on 27 October |
| Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer and settlement of the CREST instructions (as appropriate) | 11:00 a.m. on 27 October |
| General Meeting | 11:00 a.m. on 29 October |
| Announcement of results of the General Meeting and the Capital Raising | 29 October |
| Admission and commencement of dealings in New Ordinary Shares, fully paid, on the London Stock Exchange | 8:00 a.m. on 3 November |
| New Ordinary Shares credited to CREST stock accounts (uncertificated holders only) | 8:00 a.m. on 3 November |
| Despatch of definitive share certificates for the New Ordinary Shares in certificated form (to Qualifying Non-CREST Shareholders only) | 10 November |
Notes:
(1) References to times in this Announcement are to London time unless otherwise stated.
(2) If you have any queries on the procedure for acceptance and payment or on the procedure for splitting Application Forms, you should contact Capita Registrars on 0871 664 0321 (calls cost 10 pence per minute plus network extras) or +44 208 639 3399 if calling from overseas. Calls to the helpline from outside the UK will be charged at applicable international rates. For legal reasons, the Shareholder Helpline will not be able to provide advice on the merits of the Capital Raising or to provide financial, tax or investment advice. Calls may be recorded and monitored for security and training purposes.
(3) The times and dates set out in the expected timetable of key events above and mentioned throughout this Announcement and to be set out in any Application Form may be adjusted by the Company in consultation with Panmure Gordon and Numis in which event details of the new times and dates will be notified to the UK Listing Authority, the London Stock Exchange and, where appropriate, Qualifying Shareholders.
Appendix II - Definitions
The following principal definitions apply throughout this Announcement unless the context requires otherwise:
| 2009 Annual Report | the Company's annual report and accounts for the financial year ended 25 January 2009 |
| 2009 Interim Report | the Company's interim report containing unaudited consolidated financial information for the 26 weeks ended 26 July 2009 |
| Admission | the admission of the New Ordinary Shares, nil paid, to the Official List becoming effective in accordance with the Listing Rules and admission of the New Ordinary Shares to trading having been granted by the London Stock Exchange |
| Amended BoS Facility | the £25 million working capital facility provided by BoS, pursuant to an agreement dated 12 October 2009 |
| Announcement | this Announcement and the Appendices |
| Application Form | the personalised application form on which Qualifying Non-CREST Shareholders may apply for Open Offer Shares under the Open Offer |
| Articles | the articles of association of the Company, adopted by special resolution passed on 24 July 2009, as amended from time to time |
| Barclays | Barclays Bank PLC, a company incorporated in England & Wales with registered number 01026167 with its registered office at 1 Churchill Place, London E1 5HP |
| Barclays Facility | the short term £25 million term loan provided by Barclays pursuant to an agreement dated 5 April 2009 |
| Board | the board of directors of the Company as described in paragraph 1.1 of Part IV (Management and Employees) of the Prospectus |
| 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 Capital Raising Condition | the Company raising net proceeds from the Capital Raising of not less than £25 million |
| Business Day | a day (excluding Saturdays, Sundays and public holidays in England and Wales) on which banks generally are open for business in London |
| Capita Registrars | Capita Registrars Limited, a company incorporated in England & Wales with registered number 2605568 with its registered office at The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, acting as Registrars and Receiving Agent |
| Capital Raising | the Firm Placing and the Placing and Open Offer |
| Certificated or in certificated form | a share or other security which is not in uncertificated form |
| City Code | the City Code on Takeovers and Mergers |
| Closing Price | the closing middle-market quotation of an Ordinary Share as derived from the Daily Official List on a particular day |
| Companies Act 2006 | the Companies Act 2006 to the extent in force from time to time |
| 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 |
| Conditional Placees | any persons who have agreed or shall agree to subscribe for Open Offer Shares pursuant to the Placing subject to clawback to satisfy valid applications by Qualifying Shareholders pursuant to the Open Offer |
| CREST | the relevant system, as defined in the CREST Regulations, and the holding of shares in uncertificated form in respect of which Euroclear is the operator (as defined in the CREST Regulations) |
| CREST Manual | the rules governing the operation of CREST, consisting of the CREST Reference Manual, CREST International Manual, CREST Central Counterparty Service Manual, CREST Rules, Registrars Service Standards, Settlement Discipline Rules, CCSS Operations Manual, Daily Timetable, CREST Application Procedures and CREST Glossary of Terms (all as defined in the CREST Glossary of Terms promulgated by Euroclear on 15 July 1996 and as amended since) |
| CREST payment | shall have the meaning given in the CREST Manual issued by Euroclear |
| CREST Regulations | the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended |
| Current BoS Facility | the £35 million working capital facility provided by BoS pursuant to an agreement dated 23 September 2009 |
| Dealing Day | any day on which the London Stock Exchange is open for business in the trading of securities admitted to the Official List |
| Deloitte | Deloitte LLP of 2 Hardman Street, Manchester M60 2AT, acting as auditors and reporting accountants |
| Directors | the directors of the Company, as listed in paragraph 1.1 of Part IV (Management and Employees) of the Prospectus |
| Disclosure and Transparency Rules | the disclosure and transparency rules made in accordance with section 73(a) of the Financial Services and Markets Act |
| DW Sports | Dave Whelan Sports Limited, a company registered in England & Wales with registered number 6846128 with its registered office at Kilshaw Street, Pemberton, Wigan, Lancashire WN5 8EA |
| EBIT | the consolidated profits of the Group before the deduction of interest and tax (but not depreciation or amortisation) not including interest adding back certain costs including, inter alia, any exceptional or extraordinary costs and deducting certain costs including, inter alia, any exceptional or extraordinary gains and not including certain profits or gains and adding any loss (as the case may be) |
| EBITDA | in relation to any period, the aggregate of EBIT subject to certain adjustments, including adding back depreciation and authorisation |
| Enlarged Issued Share Capital | the issued ordinary share capital of the Company following completion of the Capital Raising |
| Euroclear | Euroclear UK and Ireland Limited, the operator of CREST |
| Excess Application Facility | the arrangement pursuant to which Qualifying Shareholders may apply for Open Offer Shares in excess of their Open Offer Entitlement (up to a maximum number of Open Offer Shares equal to 0.79 times the number of Ordinary Shares held in such Qualifying Shareholder's name as at the Record Date) provided they have agreed to take up their Open Offer Entitlement in full and which may be subject to scaling back in accordance with the provisions of the Prospectus |
| Excess CREST Open Offer Entitlement | in respect of each Qualifying CREST Shareholder, the entitlement (in addition to his or her Open Offer Entitlement) to apply for Open Offer Shares up to 0.79 times the number of Ordinary Shares held in his or her name as at the Record Date, credited to his or her stock account in CREST, pursuant to the Excess Application Facility, which is conditional on such Qualifying CREST Shareholder agreeing to take up its Open Offer Entitlement in full and which may be subject to scaling back in accordance with the provisions of the Prospectus |
| Excess Shares | the Open Offer Shares for which Qualifying Shareholders may apply under the Excess Application Facility |
| Excluded Shareholders | Shareholders with a registered address or resident in any Excluded Territory or, subject to certain exceptions, the United States |
| Excluded Territories and each an Excluded Territory | Australia, Canada, Japan, New Zealand, South Africa, Switzerland and the United Arab Emirates |
| Executive Chairman | the executive chairman of the Company being Sir David Jones |
| Executive Directors | the executive directors of the Company from time to time, being as at the date of this Announcement Sir David Jones, Lawrence Coppock, Richard Manning and Colin Tranter |
| Existing Ordinary Shares | the Ordinary Shares in issue at the date of this document |
| Firm Placed Shares | the 199,334,512 New Ordinary Shares which the Company intends to issue to Firm Placees in the Firm Placing |
| Firm Placing | the subscription by the Firm Placees for the Firm Placed Shares |
| Fitness Clubs Business | the fitness clubs business, including the adjoining retail stores, disposed of by the Company on 25 March 2009 |
| FSA | Financial Services Authority |
| FSMA or Financial Services and Markets Act | the Financial Services and Markets Act 2000, as amended |
| General Meeting or GM | the general meeting of the Company convened by the Notice of General Meeting to be held at 11:00 a.m. on 29 October 2009 at the Company's head office, Martland Park, Challenge Way, Wigan, Lancashire, WN5 0LD |
| Group | the Company and its subsidiary undertakings from time to time |
| HM Revenue & Customs or HMRC | United Kingdom Revenue and Customs Department |
| IFRS | International Financial Reporting Standards as adopted by the European Union |
| Initial BoS Facility | the medium term £25 million working capital facility provided by BoS pursuant to an agreement dated 3 April 2009 |
| Initial Subscription and Put and Call Option Agreement | the initial subscription and put and call option agreement dated 12 October 2009 between the Company, Newco and Numis |
| Issue Price | 25 pence per New Ordinary Share |
| Lazard | Lazard & Co., Limited of 50 Stratton Street, London W1J 8LL, acting as financial adviser and sponsor |
| LIBOR | London Inter Bank Offering Rate |
| Listing Rules | the listing rules made pursuant to Part VI of the Financial Services and Markets Act |
| London Stock Exchange or LSE | London Stock Exchange plc |
| Net Debt | Total Debt less Consolidated Cash and Cash Equivalents |
| Net Debt Costs | all interest and commissions, periodic fees (including commitment fees) and other financing charges incurred by the Group plus or minus certain adjustments |
| New Ordinary Shares | the new Ordinary Shares to be issued by the Company pursuant to the Capital Raising and "New Ordinary Share" means one of them |
| Non-executive Directors | the non-executive directors of the Company from time to time, being as at the date of this Announcement John Clare and Alan Benzie |
| Notice of General Meeting | the notice of General Meeting set out at the back of the Prospectus |
| Numis | Numis Securities Limited of The London Stock Exchange Building, 10 Paternoster Square, London EC4M 7LT |
| Official List | the official list of the UK Listing Authority |
| OFT | the Office of Fair Trading, Fleetbank House, 26 Salisbury Square, London, EC44 8JX |
| Open Offer | the offer to Qualifying Shareholders, constituting an invitation to apply for the Open Offer Shares, including pursuant to the Excess Application Facility, on the terms and subject to the conditions set out in the Prospectus and, in the case of Qualifying Non-CREST Shareholders, in the Application Form |
| Open Offer Entitlements | the entitlement of a Qualifying Shareholder to apply for 4 Open Offer Shares for every 5 Existing Ordinary Shares held by him on the Record Date |
| Open Offer Shares | the 200,665,488 Ordinary Shares to be offered to Qualifying Shareholders under the Open Offer |
| Ordinary Shares | the ordinary shares of 5 pence each in the capital of the Company (including Existing Ordinary Shares and New Ordinary Shares) |
| OSC | the Original Shoe Company Limited, a wholly owned subsidiary of the Company, now in administration |
| Panmure Gordon | Panmure Gordon (UK) Limited, Moorgate Hall, 155 Moorgate, London EC2M 6XB |
| Placing | the placing of the Open Offer Shares in accordance with the Placing Agreement |
| Placing Agreement | the placing agreement dated 12 October 2009 between the Company, Lazard, Panmure Gordon and Numis |
| Prospectus | the prospectus to be published by JJB on 12 October 2009 in relation to the Firm Placing and Placing and Open Offer |
| Prospectus Rules | the prospectus rules made pursuant to Part VI of the Financial Services and Markets Act |
| Qualifying CREST Shareholders | Qualifying Shareholders holding Ordinary Shares in uncertificated form in CREST (other than Excluded Shareholders) |
| Qualifying Non-CREST Shareholders | Qualifying Shareholders holding Ordinary Shares in certificated form (other than Excluded Shareholders) |
| Qualifying Shareholders | Shareholders on the register of members of the Company at the Record Date |
| Qube | Qubefootwear Limited, a wholly owned subsidiary of the Company, now in administration |
| Receiving Agent | Capita Registrars |
| Record Date | close of business on 8 October 2009 |
| Registered Office | the registered office of the Company, Martland Park, Challenge Way, Wigan, Lancashire, WN5 0LD |
| Remuneration Committee | the remuneration committee of the Company |
| Resolutions | the resolutions set out in the Notice of General Meeting |
| SFO | the Serious Fraud Office, Elm House, 10-16 Elm Street, London, WC1X 0BJ |
| Share Issue Resolution | Resolution 1 set out in the Notice of General Meeting |
| Shareholder | any holder of Ordinary Shares |
| Sports Direct | Sports Direct International plc, a company incorporated in England & Wales with registered number 06035106 with its registered office at Unit A, Brook Park East, Shirebrook, NG20 8RY |
| stock account | an account within a member account in CREST to which a holding of a particular share or other security in CREST is admitted |
| Subscription and Transfer Deed | the subscription and transfer deed dated 12 October 2009 between the Company, Newco and Numis |
| Total Debt | without double counting, the aggregate of the outstanding principal amount of any borrowings and other debt equivalents, including inter alia, the outstanding principal amount of any bond note, debenture, loan stock or other similar instrument |
| UK Listing Authority or UKLA | the Financial Services Authority in its capacity as competent authority under the Financial Services and Markets Act |
| Uncertificated or in uncertificated form | a Share recorded on the Company's register as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST |
| United Kingdom or UK | the United Kingdom of Great Britain and Northern Ireland |
| United States or US | the United States of America, its territories and possessions and all areas subject to its jurisdiction, the District of Columbia and any state of the United States of America |
| US Securities Act | the US Securities Act of 1933, as amended |
Important Notice
This Announcement is not a prospectus but an advertisement and Qualifying Shareholders should not acquire any New Ordinary Shares referred to in this Announcement except on the basis of the information contained in the Prospectus.
Neither the content of JJB's website nor any website accessible by hyperlinks to JJB's website is incorporated in, or forms part of, this Announcement. The distribution of this Announcement, the Prospectus and any other documentation associated with the Capital Raising into jurisdictions other than the United Kingdom may be restricted by law. Persons into whose possession these documents come should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, such documents should not be distributed, forwarded to or transmitted, directly or indirectly, in whole or in part, in or into the United States, Australia, Canada, Japan, New Zealand, Switzerland, South Africa and the United Arab Emirates.
No action has been taken by JJB or any other person that would permit an offer of the New Ordinary Shares or possession or distribution of this Announcement, the Prospectus or any other documentation or publicity material or the Application Forms in any jurisdiction where action for that purpose is required, other than in the United Kingdom.
The New Ordinary Shares have not been and will not be registered under the US 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, within the United States except in reliance on an exemption from the registration requirements of the US 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 New Ordinary Shares in the United States. The New Ordinary Shares are being offered and sold outside the US in reliance on Regulation S under the US Securities Act. The New Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Ordinary Shares or the accuracy or adequacy of the Application Form or this document. Any representation to the contrary is a criminal offence in the US.
The New Ordinary Shares have not been and will not be registered under the relevant laws of any state, province or territory of any of the Excluded Territories and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within any Excluded Territory except pursuant to an applicable exemption from registration requirements. There will be no public offer of New Ordinary Shares in Australia, Canada, Japan, New Zealand, Switzerland, South Africa and the United Arab Emirates.
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 of New Ordinary Shares. 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.
This Announcement has been issued by, and is the sole responsibility of, the Company. No person has been authorised to give any information or to make any representations other than those contained in this Announcement and if given or made, such information or representations must not be relied on as having been authorised by JJB or any of the Banks. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules, the issue of this Announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Group since the date of this Announcement or that the information contained in it is correct at any subsequent date.
Lazard, Panmure Gordon and Numis, who are authorised and regulated in the UK by the Financial Services Authority, are acting for JJB and no one else in connection with the Capital Raising and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the Capital Raising and will not be responsible to anyone other than JJB for providing the protections afforded to their respective clients or for providing advice in relation to the Capital Raising or any matters referred to in this Announcement.
Apart from the responsibilities and liabilities, if any, which may be imposed on Lazard by the Financial Services and Markets Act 2000, none of Lazard, Panmure Gordon and Numis accepts any responsibility whatsoever for the contents of this Announcement, and makes no representation or warranty, express or implied, for the contents of this Announcement, including its accuracy, completeness or verification, or for any other statement made or purported to be made by it, or on its behalf, in connection with JJB or the New Ordinary Shares or the Capital Raising, and nothing in this Announcement is or shall be relied upon as, a promise or representation in this respect whether as to the past or future. Each of Lazard, Panmure Gordon and Numis accordingly disclaims to the fullest extent permitted by law all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this Announcement or any such statement.
No statement in this Announcement is intended to be a profit forecast and no statement in this Announcement should be interpreted to mean that earnings per share of JJB for the current or future financial years would necessarily match or exceed the historical published earnings per share of JJB.
This Announcement includes statements that are, or may be deemed to be, "forward looking statements". These forward looking statements can be identified by the use of forward looking terminology, including the terms "believes", "projects", "estimates", "anticipates", "expects", "intends", "plans", "goal", "target", "aim", "may", "will", "would", "could", "should" or "continue" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include all matters that are not historical facts. They appear in a number of places throughout this Announcement and include statements regarding the intentions, beliefs or current expectations of the Directors, the Company or the Group concerning, among other things, the Company's financial position and projections, business plan, financial model and future covenant ratios and compliance, the results of operations, prospects, growth, strategies and dividend policy of the Group and the industry in which it operates.
By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond the Company's ability to control or predict. Forward looking statements are not guarantees of future performance. The Company's or the Group's actual financial performance, results of operations, dividend policy and the development of the industry in which it operates may differ materially from the impression created by the forward looking statements contained in this Announcement. In addition, even if the financial performance, results of operations and dividend policy of the Company or the Group (as the case may be), and the development of the industry in which it operates, are consistent with the forward looking statements contained in this Announcement, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause these differences include, but are not limited to: the effect of the Capital Raising on the Group; the Group's ability to generate growth or profitable growth; the Group's ability to generate sufficient cash over the longer term to service its debt; the Group's ability to control its capital expenditure and other costs; changes in the competitive framework in which the Group operates and its ability to retain market share; industry trends; general local and global economic, political, business and market conditions; significant changes in exchange rates, interest rates and tax rates; significant technological and market changes; future business combinations or dispositions; changes in government and other regulation, including in relation to the environment, health and safety and taxation; labour relations and work stoppages; and changes in business strategy or development plans. More detailed information on the potential factors which could affect the financial results of the Group is contained in the Group's public filings and reports.
The forward looking statements contained in this document speak only as of the date of this Announcement. Other than in accordance with their legal or regulatory obligations (including under the Listing Rules and/or the Prospectus Rules and/or the Disclosure and Transparency Rules) and as required by the FSA, the London Stock Exchange or the City Code, neither of the Company or the Banks undertakes any obligation to update or revise publicly any forward looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward looking statements attributable to the Group or individuals acting on behalf of the Group are expressly qualified in their entirety by this paragraph. Prospective investors should specifically consider the factors identified in this document which could cause actual results to differ before making an investment decision.
This document should not be considered a recommendation by the Company, the Banks or any of their respective directors, officers, employees, advisers or any of their respective affiliates, parent undertakings, subsidiary undertakings or subsidiaries of their parent undertakings in relation to any purchase of or subscription for the New Ordinary shares. Prices and volumes of, and income from, securities may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. You are advised to read this document and, once available, the Prospectus and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect the Group's future performance and the industry in which it operates. Persons needing advice should consult an independent financial adviser.