"Good chance of JJB survival" says KPMG as Ronnie row intensifies
TURNAROUND expert Brian Green said today he believes JJB Sports has a “very good chance of survival”.
Mr Green, a partner with accountants KPMG said he was certain the landlords of the 120 closed JJB stores would not be influenced by any other party in deciding whether to back the Creditors’ Voluntary Arrangement, insisting they will take a “commercial view” on the matter.
Major rival Sports Direct, which owns a 5% stake in JJB – and the equivalent of another 16% through derivatives – is reported to have written to JJB’s landlords to discourage them from renegotiating leases, and thus forcing it out of business.
Mr Green said: “We are sending the offer to the landlords, we think it is a compelling offer which will be better than the alternative which is administration and will mean they will get nothing.
“I think the landlords will take a commercial view in their own interests, not anyone elses’. It’s a fair offer.”
Mr Green, who is head of KPMG’s restructuring division, said the landlords would share a pot of £10m – and receive the equivalent of six month’s rent.
He said: “The economic environment is tough going for all concerned; the dire straits in the property market has resulted in most of the unoccupied stores remaining vacant as demand for commercial retail space has fallen off a cliff.
“We believe the proposed CVA offers a fair compromise between JJB’s operational needs and the landlords’ rights under the tenancy agreements.
“In the next few days, we will be busy in discussion with landlords, with the detailed proposal being put forward to the whole group on Monday. If the CVA proposal is agreed by 75% of the landlords, the lenders have agreed to continue the ‘standstill’ arrangement.
The CVA is central to Wigan-based JJB’s survival plan following the sale of the health clubs business to former chairman Dave Whelan for £83m.
Meanwhile the dispute between the retailer and its former chief executive Chris Ronnie looked to be heading for the courts.
Yesterday JJB said Mr Ronnie had been dismissed for gross misconduct without a payoff after a disciplinary hearing.
In a statement Mr Ronnie’s lawyers, Manchester-based Pannone, said their client’s resignation had been accepted on February 24 and a sum of money – thought to be around £270,000 deposited with them, where it remains.
Anthony Barnfather, head of regulatory investigations at Pannone, said: “As previously stated, our client maintains his position that he resigned after reaching a financial settlement with JJB on the 24th February this year.
“On that date, the sum agreed was sent from JJB to Pannone without qualification. Therefore our client’s position is that he ceased to be an employee of JJB from the 24th February 2009.
“As such the finding of misconduct is in our opinion wholly erroneous.”
