The company, which has 180 stores and employs 4,000 people, has been locked in discussions with suppliers and investors in recents months in a bid to secure further funding as it battles with falling sales and stiff competition from rivals and weak consumer spending.
But the retailer said yesterday it believed it would be unable to raise the level of support required to turn itself around and has hired KPMG to oversee the formal sale process.
KPMG senior partner David McCorquodale said JJB had already generated interest from a number of private equity and trade buyers.
JJB has debts and outstanding loans of £36m. It admitted that as a result, any rescue deal is likely to result in shareholders – which include the Bill & Melinda Gates Foundation – being wiped out, sending shares plummeting almost 80 per cent.
Just four months ago the group was thrown a £20m lifeline by US retailer Dick’s Sporting Goods, but it took an impairment charge that effectively wrote off the investment earlier this month.
Other investors who will be left out of pocket include Invesco Asset Management, the largest shareholder Harris Associates, and Crystal Amber, the activist asset manager.
DAVID McCorquodale, the senior partner at KPMG charged with finding a buyer for the beleaguered JJB, said the first day of business had got off to a good start and he had received calls from a mix of trade and private equity interested parties. A seasoned professional, JJB’s case is nothing McCorquodale has not seen before, after leading the search to find a buyer for outdoor equipment retailer Blacks just six months ago.
He started with KPMG in 1984 and has worked in corporate finance since 1987, advising on divestitures, acquisitions and fund raising. He has worked on the sale of Card Factory, Dreams, Helly Hansen, Independent Pharmacy Care Centres, Britax Childcare and Maplin Electro-nics.
Meanwhile long-time nominated adviser Numis Securities – who helped the firm move from a main market listing to the Alternative Investment Market (AIM) last year – is also helping with the sale, led by Heraclis Economides and Richard Thomas.
Herbert Smith is also advising JJB Sports on the sale process. The law firm is long-time adviser to the retailer and last year acted on its £65m capital raising and again on its delisting from the main market of the London Stock Exchange onto AIM.