JJB given more time to sell health clubs
JJB Sports said today it had extended its standstill agreement with its banks while it finalises the sale of its health clubs arm, and revealed that it is exploring ways to restructure its finances, without going into insolvency.
Former chairman Dave Whelan is in exclusive talks with JJB to buy its 52 gyms and attached stores for around £70m.
The ailing company, which owes three banks, HBOS, Barclays and Kaupthing around £60m, said the trio had agreed to extend the standstill agreement for another week, at no extra cost, as long as they were satisfied with the progress of the fitness clubs deal.
“This extension has been granted in order to allow the company to reach a definitive agreement for the disposal of its Fitness Clubs business with a potential purchaser,” a statement said.
It added that it was looking at a “number of solvent restructuring options”, including a company voluntary arrangement.
A spokesman for the company said: “Clearly the sale of the fitness clubs is the top priority, but the company is also looking to work with its creditors – landlords, suppliers as well as the banks to find a way forward.”
Reports at the weekend suggested JJB aims to offload about 30 outlets and strike a deal with landlords to pay to end the lease or negotiate a lower rent. If that cannot be agreed, JJB may separate these stores from the rest of the business and put them into a company voluntary arrangement.
Meanwhile Wigan MP Neil Turner has spoken of his key role in helping Dave Whelan fund the acquisition of the fitness clubs business.
Mr Turner spoke to Chancellor Alastair Darling on Mr Whelan’s behalf because £45m of the tycoon’s fortune was in accounts with a collapsed Icelandic bank – which the Treasury has agreed to guarantee.
He told TheBusinessDesk: “I was approached by Mr Whelan, and of course, given the importance of JJB’s future to Wigan I was happy to act as a go-between.
“If the fitness clubs deal does not go ahead I am 99% certain the whole company will go to the wall and 12,000 jobs would be lost.
“I explained this to the Chancellor the situation and the urgency of the matter and he was able to help.”
