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JJB ‘to close 89 stores’
Struggling sports retailer announces details of CVA; allows for closure of 89 stores; claims ‘restructuring plan is on track’
JJB Sports has announced the details of its Company Voluntary Arrangement (CVA), which it hopes will’ restore the viability of the Group’s business model’ and ‘assist in a return to profitability’.
Under the terms of the CVA, JJB Sports will be able to close 43 stores, two of which are not currently trading, by April 24, 2012. It will also be able to review the performance of a further 46 stores and close those on or before April 24, 2013.
The amount payable on the leases attached to the 89 properties shall be 50 per cent of the contractual pro rata monthly rent prior to their closure plus an amount equal to five per cent of the contractual pro rata monthly rent by way of a contribution in respect of dilapidations and the contractual amount payable in respect of turnover rent, insurance and service charge.
The CVA also allows for an additional payment to compromised landlords that is linked to the market performance of JJB Sports, which is payable on April 24, 2013. This will be settled in cash or ordinary shares in JJB Sports and have a total value between £2.5m and £7.5m.
All remaining stores within the Group’s portfolio will move to monthly rent payments over the next two years.
JJB Sports needs 75 per cent of creditors and 50 per cent of shareholders to agree to the terms of the CVA for it to be passed.
Furthermore, and subject to shareholder approval, JJB Sports said it intends to delist from the premium segment of the Official List and cease trading on the London Stock Exchange’s main market, moving to the Alternative Investment Market (AIM) by the end of April 2011.
Mike McTighe, JJB Sports chairman, said: "JJB Sport's restructuring plan is on track.
"In formulating these CVA proposals we have talked to our landlords and listened to their views. As a result, we are offering them a possible share in the value of a restructured JJB Sports of up to £7.5 million, payable in two years' time.
"Before the shareholder and creditor meetings, we intend to release details of the anticipated funding requirements of a restructured JJB Sports and our new business plan, together with the key terms of our second capital raising that will deliver the longer term financing required to enable the Group to move forwards on a far sounder footing.
“There remains much to be done, but we have achieved some significant success in recent weeks, and are hugely grateful to all our key stakeholders who have shown us so much support. With their continued backing we remain confident about the future of this business."
Read editor David Pittman's thoughts on the CVA announcement here.
