Ronnie probe starts at JJB

JJB SPORTS yesterday said that it was formally investigating &ldquo;improper expenses claims&rdquo; made by its former chief executive Chris Ronnie.<br /><br />The sports retailer, which also confirmed a well-trailed &pound;100m rights issue, alleges that it was brought to the brink of insolvency by Ronnie and former executives due to a series of &ldquo;unwise management decisions&rdquo;.<br /><br />The company now says that it is investigating the seizure of Ronnie&rsquo;s 27.5 per cent stake by Icelandic bank Kaupthing.<br /><br />It has also launched an inquiry into the alleged misuse of company credit cards and the personal use of company assets.<br /><br />And Ronnie faces scrutiny over an alleged lack of compliance with transparency rules in the lead-up to a trading update to the markets on 24 July 2008.<br /><br />JJB Sports has been embroiled in fresh controversy in recent days, thwarting attempts to turn it around by executive chairman Sir David Jones.<br /><br />The embattled sportswear retailer had to halt the announcement of its &pound;100m rights issue on Friday after an &ldquo;unfounded smear campaign aimed at derailing the fundraising&rdquo; worked its way around the market and press. <br /><br />But after investors were reassured that the rumours were untrue, the company succeeded in its issue of 400m new shares at the heavily discounted price of 25p through a firm placing and open offer.<br /><br />Panmure Gordon and Numis are acting as joint broker, bookrunner and underwriter, while Lazard is the company&rsquo;s financial adviser. <br /><br />Yesterday it was revealed that the advisers will pocket six per cent of the funds raised as fees.<br /><br />And the group said that its five executive directors would each get 0.91 per cent of the enlarged share capital. JJB shares closed down 1.25p yesterday at 33.5p.<br /><br />Meanwhile, it emerged that JJBSports was being investigated by the Serious Organised Crime Agency over possible deception by former employees. <br /><br /><strong>ADVISER FEES</strong><br />News that ailing retailer JJB Sports is having to cough up six per cent, or &pound;6m, of its &pound;100m rights issue to pay advisers&rsquo; fees has reignited a growing row between shareholders and the banks.<br />There is mounting concern that shareholders are being squeezed by a reduction in competition among banks following the casualties of the financial crisis.&nbsp; <br />Since mid-2008, when the financial turmoil started to afflict equity markets, fees on rights issues have jumped from two per cent of deal values to an average of five per cent. <br />The head of the Association of British Insurers Peter Montagnon recently said: &ldquo;There is a view that the fees are too high and not always fairly allocated between those who take real risk and those who do not.&rdquo;<br />Montagnon argues that all firms should justify fees in every case.<br />But if JJB&rsquo;s management is to be believed, the rights issue is already heavily over-subscribed &ndash; begging the question: why were the fees so hefty?<br />No doubt&nbsp; Panmure Gordon, Numis and Lazard will argue they are working pretty hard to persuade shareholders to take up shares, especially after a damaging smear was leaked around the markets on the day of the intended fundraising launch. <br />Ashley Armstrong

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