JJB stakes its future on deal with landlords as JD talks end
Saturday 12 March 2011
Another potential lifeline for the beleaguered JJB Sports disappeared yesterday when its rival high-street retailer, JD Sports Fashion, announced it was no longer interested in making a bid for the company.
JD said last month it wanted to pursue a merger with JJB, which is struggling in the face of poor trading and enormous debts. But yesterday it said it was no longer considering a deal, accusing its rival of failing to give it the information it needed to come up with a detailed proposal.
A spokesman for the company said: "Despite requests made with a view to enabling it to put forward alternative proposals for the future of the JJB business, since early February, JD has received no further information whatsoever beyond what is in the public domain."
JJB rejected JD's complaints, arguing it had never been presented with the sort of detail that would merit additional disclosures. A spokesman said: "The board considered JD Sports' indicative proposal to be highly conditional and lacking sufficient certainty to be deliverable."
Irrespective of the claims and counter-claims, the failure of talks with JD leaves JJB staking its future on coming to a deal with the landlords of its retail outlets, to whom it has already presented a proposed company voluntary arrangement (CVA).
Under the CVA, which would be JJB's second such pact in two years, the retailer would close almost 90 of its stores and pay landlords only 50 per cent of the rent owed on the properties. In return, the landlords would get payments worth as much as £7.5m if JJB hits set performance targets over the next two years.
Even if its landlords, who are likely to struggle to find new tenants if JJB is forced to cease trading, say yes to the deal, the retailer has warned that it will then have to ask shareholders for tens of millions of pounds of new finance in order to keep trading. JJB shares fell 1.5p to 13.5p last night.
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