JJB Sports - Photo: www.jjb.co.uk

JJB Sports (JJB.L) shares dropped 17 percent to 25.5 pence after the British sports retailer says it is looking at an equity fundraising. This follows a report in Saturday's Times newspaper that the firm is seeking to raise at least 50 million pounds ($81.3 million) by selling shares at 12 pence each.

"12p appears an excessively dilutive placing price," says Altium analyst David Stoddart, who has a "sell" rating on the shares.

"While such a move would provide JJB with needed expansion capital, there is no evidence yet -- nor will there be for some time -- on what sort of returns those funds would generate," he adds.

KBC Peel Hunt analyst John Stevenson says the discount on any share sale would have to be "fairly significant in order to compensate for the size of the task ahead."