JJB fights on after new CVA approved

JJB Sports has announced that it has gained approval for its latest restructuring plan from landlords.

The Wigan-based company needed the support of 75% of creditors by value for its second Company Voluntary Arrangement (CVA) in two years, which will allow it to close 43 stores within the next 12 months and potentially close a further 46 stores within two years.

It has also proposed a reduction in rents paid to the remainder of its landlords to 55% of current levels.

Creditors voted in favour of the plan at a meeting this morning. Speaking after the vote, JJB Sports’ chairman Mike McTighe said: “I am delighted that our CVA proposals have been approved at the creditors’ meetings held earlier today.

“JJB continues to develop strong relationships with its landlords who have supported the Company in this process, and we look forward to working with them, alongside all our stakeholders, as we continue to achieve crucial milestones in our turnaround.”

The deal, the second in as many years, paves the way for JJB Sports to complete a further fundraising of around £65m from its existing shareholders.

The company’s restructuring will also see its shares move from the Full List to AIM. 

Brian Green, Head of Restructuring at KPMG in the North West and ‘supervisor’ of the CVA, commented: “While the CVA is but one element of JJB’s plan to turn its fortunes around, it is a vital cog in the mechanism that will put the business in a stronger operational position and, ultimately, avoid administration. 

“The proposal process has given both the company and its creditors the opportunity to agree a compromise that is mutually acceptable.  We estimate that the landlords accepting a reduced rent can expect to see a substantially larger return via the CVA than in the alternative of administration: 24.6p to 29.2p in the £1 versus 1.1p in the £1.”

Mr Green said that while a CVA will always be a better option than administration, KPMG had sought to improve the model, to address landlords’ concerns.

“To this end, the landlords have welcomed the opportunity to share in the upside of the turnaround via the ‘clawback’ mechanism.”