AILING sportswear retailer JJB Sports yesterday backed its executive chairman Sir David Jones amid a growing storm over a £1.5m loan he received from Mike Ashley, chief executive of arch-rival Sports Direct.
JJB Sports said that the board had given its “unanimous support” to Jones and said it believes “that he is the right person to lead the Company through the next phase of the group’s restructuring and to turn around its sports retail busines”.
The troubled sportswear chain said that it was earlier this year made aware of the loan taken out by Jones in October 2007 – before he became executive chairman – to invest in private company Advanced Network Technologies.
The group said it had decided the arrangement was a “private one concerning Mr Ashley and Sir David and not one requiring public disclosure.”
The loan, which was interest-free and had no arrangement fee, was repayable in September 2008. That date was extended until January this year. In February it was extended once again to June 2010, but with a two per cent interest charge
JJB yesterday said Jones intends to repay the loan as soon as possible “to avoid further distraction for the company and its business”.
But since the loan was made public at the weekend, investors have been rattled by concerns of a potential conflict of interest. It also leaves a stain on Jones’ reputation. He has been seen up until now as the white knight of JJB’s turnaround.
It is understood that Mike Ashley’s advisers were last night preparing a rebuttal to Jones’ version of events. They are expected to claim today that the loan was made to Jones after he joined the JJB board, directly contradicting JJB’s statement.