JJB Sports today confirmed that it is planning to raise at least £50 million in new capital to fund a turnaround of the leisure chain.

The company issued a stock exchange statement this morning, saying it was "reviewing a range of possible options" to raise capital, including selling non-essential parts of the business, issuing new stock and trying to extend its bank loans.

The announcement came as allegations emerged about its executive chairman, Sir David Jones. The threat of dilution and turmoil surrounding Sir David sent shares down 7.5p or 24 per cent to 23.25p.

Sir David has been accused of asking Sports Direct executives to distort the facts about a £1.5 million personal loan from his rival Mike Ashley, the Sports Direct founder, in a last-ditch attempt to keep the controversial loan secret.

The allegations were made in an e-mail seen by The Times and sent by Bob Mellors, Sports Direct finance director, to Dave Forsey, chief executive, and the company’s lawyers on Friday.

Sir David spoke to Mr Ashley, the owner of Newcastle United, and Mr Mellors to discuss press coverage of the loan shortly after inquiries from The Times about the loan. Sir David did not respond to those inquiries.

Mr Mellors said in his e-mail that Sir David, a respected member of the retailing establishment, told him he “would have to resign over the matter”.

A spokesman for JJB said last night: “Sir David emphatically denies he asked Mike Ashley or any of his associates to lie. Sir David has no intention of leaving JJB until its turnaround is complete and the damage done by the previous management is set right.”

News of the loan could raise questions about conflicts of interest because Mr Ashley has also been a significant shareholder in JJB. A spokesperson for JJB said that the board was told about the loan, adding that there was no legal requirement to tell the market.

Mr Mellors, who telephoned Sir David after the JJB boss contacted Mr Ashley earlier that evening, added in his e-mail: “David then asked if Mike A had in his mind written the amount off and in which case we could deny its existence.” Mr Mellors added that Sir David proposed presenting the loan as a company donation to Sir David’s charity, or as an investment. “I confirmed that we would not be inclined to say it was something that it was not . . . David confirmed that he would not want us to lie,” he said.

Mr Ashley’s lawyers wrote to Sir David on Saturday morning alleging that Sir David had asked him to lie about the loan because news of it could be “the source of some embarrassment”. A JJB spokesperson said that the company’s own lawyers would write to Mr Ashley today rejecting his allegations.

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