JJB to close 95 stores and asks for £31m funding
Saturday 12 February 2011
JJB sports gave warning yesterday that the final whistle would be blown on its struggle to survive if its landlords fail to agree a company voluntary arrangement (CVA) to enable it to close up to 95 stores.
The company, which made history with the first solvent CVA two years ago, said it had identified 45 shops which were no longer viable. The future of a further 50 is under review with a core of 150 remaining.
A CVA is a legal deal that enables companies to ditch leases, or change the rental terms on poorly performing stores. They have become increasingly controversial in recent months and landlords have already warned that the company would have to present a "compelling case" for them to accept a second one with JJB. Its previous CVA allowed it to close 140 stores.
The Wigan-based chain, which employs 6,000 people, is in takeover talks with rival JD Sports, and they are understood to be continuing. However, sources close to the company said it had to act because its survival remains open to question and it cannot afford to delay an emergency cash call in the hopes of a deal that may never happen.
JJB has told investors that even if it gets the CVA away it will still need to raise a further £31m from them to meet its funding needs until April.
The seriousness of its plight was expressed in no uncertain terms in an announcement to the Stock Exchange yesterday when it said it would "no longer be able to trade as a going concern which would result in the appointment of receivers, liquidators or administrators" if the two-step survival plan were not effected.
JJB's proposed CVA is being handled by KPMG, which also oversaw the controversial deal that enabled the Speciality Retail Group, owner of the Suits You chain, to slash its rent bill. Despite the CVA being agreed, the company still collapsed into administration in October.
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