JJB sets out restructuring plan
JJB Sports has announced that it has agreed a new business plan with its lenders and is sending out details of planned restructuring to landlords and other key creditors.
The company said that it has “maintained an open and constructive dialogue” with its key creditors regarding its second Company Voluntary Arrangement in as many years. It added that it has “actively engaged” with landlords responsible for around 47% of its total rent bill.
Landlords are expected to take the brunt of any planned restructuring as bank debts owed are secured against the company’s assets and much of its stock is supplied on a sale-or-return basis. The company has proposed closing 45 stores immediately and potentially 50 more over the next two years, which would leave a core of 150 outlets.
Already, shopping mall owner Capital Shopping Centres indicated to analysts this week that it is likely to vote against the CVA plan. It only has four JJB stores within its network of shopping centres, but other landlords have also indicated that they would prefer to take chances in re-letting space in a property market that is considerably stronger than when the retailer completed its first restructuring.
However, Wigan-based JJB has argued that the CVA is a necessary step in its turnaround and that without it there is a danger of the company being placed into administration. It employs around 6,000 people.
Earlier this week, it gained approval from shareholders for a £31.5m capital fundraising which saw its core group of investors – Crystal Amber, Harris Associates, Invesco Perpetual, The Bill & Melinda Gates Foundation and GoldenPeaks Capital – increase their shareholding in the company to a combined 71%.
Mike McTighe, JJB chairman, said: “We are delighted to have achieved two further milestones this week – successful completion of the first capital raising and delivery of our revised business plan to BoS.
“With publication of our CVA document scheduled for next week, the board and management team continue to work extremely hard to rebuild JJB.
“With the continued support of all the Company’s stakeholders, we remain confident that we can deliver a successful turnaround.”
