"Whelan drops JJB gyms bid"
FORMER JJB Sports chairman Dave Whelan has reportedly pulled out of a £50m deal to buy the ailiing retailer’s health clubs over concerns about liability for leases.
JJB said last week that it had appointed investment bank Lazards to sell the strongly-performing health clubs and other non-core assets as the Wigan company looks to cut its debt.
At the same time JJB’s banks gave it breathing space by deferring the repayment deadline for a £20m loan originally due yesterday.
However, the bills are set to mount with an estimated £15m quarterly rental payment due around Christmas.
The offer from the veteran multi-millionaire entrepreneur and Wigan Athletic owner, who sold his stake in JJB last year, has floundered over concerns about the financial liability for retail leases at stores within the gyms should JJB fail.
It us understood that although the gyms are largely operated as a separate business, their finances are tied with the core retail business because some effectively act as landlords to JJB stores.
The firm’s share price has plummeted on concerns over its financial health. On Fiday broker Citigroup cut its target price on JJB’s shares to 1p, sending the price sliding 16% to 7¾p.
In a trading update last week the group reported a further fall in like-for-like sales and said it had started its Christmas sale two weeks early in a bid to lure customers through its doors.
