Who needs soap operas when we have companies like JJB Sports?
Whatever else we can say about the markets, they're rarely boring. And that's especially true if you're investing in individual companies rather than tracking the whole market.
Investors in retailer JJB Sports (LSE: JJB), in particular, have had a roller-coaster ride over the past couple of years.
The (recent) peak
Just over two years ago the shares hit a high of 302.75p, shortly before the finance director and his wife sold £1m worth of shares in the company, in what turned out to be a very shrewdly-timed deal.
It was also around that time that Mike Ashley's Sports Direct (LSE: SPD) overtook JJB to become the the market leader in sports goods. Over the next year or so, the shares gradually fell back to around 100p, as concerns mounted about the effects of the credit crunch on consumer spending.
The trough
Shares fell by another two-thirds following a profit warning in September, and eventually hit a low of 3.5p just before Christmas, as investors feared that the company could be facing bankruptcy.
But all was not lost. At the start of January, Sir David Jones, newly decorated by the Queen in the New Year Honours List, was appointed Executive Chairman. Jones has considerable experience in the retail sector, having overseen the dramatic rise of clothing chain Next (LSE: NXT), as well as sitting on the board of Wm. Morrison (LSE: MRW).
Within weeks, Jones had suspended the company's Chief Executive, Chris Ronnie, pending investigations into the transfer of shares in the company to the Icelandic bank Kaupthing. The subsequent departure of Ronnie from the company does not appear to have been on friendly terms.
Recovery
JJB then managed to work out a 'company voluntary arrangement' (CVA) with its creditors, making it the first listed company to do so. This was basically a deal that allowed the company to avoid going into administration, and work with the creditors to agree a payment plan.
Shares in JJB reached 40.75 by late May, an eleven-fold increase in five months.
More controversy
In recent days it has emerged that Sir David accepted a loan of £1.5m from Mike Ashley in 2007, around the time that he initially became involved in JJB as a non-executive director. Ashley, you'll recall, is the head of Sports Direct, which eclipsed JJB to become the biggest player in that market. And in addition to being a rival, Sports Direct is also a supplier.
The exact timing of this loan is the subject of some debate, as Jones claims it was arranged days before his appointment, while Ashley asserts that he was approached after Jones' appointment. In either case, JJB's directors and advisors "viewed the arrangement as a private one concerning Mr Ashley and Sir David and not one requiring public disclosure".
While that may technically be the case, investors may view it as rather strange that Sir David would approach the head of JJB's biggest competitor in his time of need. Of all the bosses of all the companies in all the world, he had to borrow from him?
And for what it's worth, it's not just the JJB's investors who find this a little odd: As Mr Ashley told The Times on Tuesday, "You can imagine my surprise when David approached me for a loan. He'd been there five minutes and Chris Ronnie was asking me for a loan for him. I thought it was a bizarre thing to ask for".
The shares now trade at 22p, and It will be interesting to see how this story plays out. In the meantime, it's reported in the press that Sir David's home in Ilkley, West Yorkshire, is now on the market for £2.25m.
Never a dull moment.
More from Padraig O'Hannelly:
