Landlords back JJB rescue deal

Stricken retailer JJB Sports was saved from administration today after landlords backed its second rescue deal in as many years.

The sportswear group received critical support for its survival plans that will see it close 43 unprofitable stores, place a further 46 under review and move to monthly rental payments.



More than 75% of JJB's creditors - the majority of which are landlords - and over 50% of shareholders approved a controversial company voluntary arrangement (CVA), which is an alternative to administration.



The move offers hope for the future of the battered chain and its 6,100 staff.



Mike McTighe, chairman of JJB, said the vote demonstrates the "solid support" for its turnaround.



He added: "We would like to thank our landlords and creditors who have supported the company in this crucial vote. As a result, the management and the vast majority of our colleagues now have the opportunity to work alongside all stakeholders as we continue to achieve essential milestones in our turnaround."



Landlords have forfeited a significant amount in lost rent as part of the CVA. They are likely to receive between 25p and 29.2p in every pound they are owed, although this compares with just 1p if the company falls into administration.



Under terms of the deal, Wigan-based JJB offered landlords of stores which are shut a sweetener of up to £7.5 million in cash or shares in two years, depending on its performance.



But the British Property Federation (BPF), which represents landlords, warned today's vote should not be seen as a "green light" for retailers to dump failing stores.



Liz Peace, chief executive of the BPF, said: "Landlords treat each CVA on its merits and JJB is a business undergoing significant changes.



"This is not an opportunistic dumping of stores, rather a genuine attempt at rescuing the business, and should not be seen as a green light for other retailers to restructure their portfolios via a CVA at the expense of both landlords and their competitors."



Shares in the retailer leapt higher as today's CVA approval brought JJB back from the brink.



Hopes for the CVA were boosted in recent days when two of its biggest landlords, Peel Holdings and Hammerson, said they would vote in favour of the scheme.



Its chances of success also increased when it emerged that JJB's largest creditor is also a subsidiary of the group.



A company called Blane Leisure is a wholly-owned subsidiary of JJB, which signs up the group's store leases under its own name. Blane is said to be owed £150 million by JJB, putting it at the top of the creditor chain.



JJB has staked its future on winning approval for the CVA after takeover talks with rival JD Sports recently ended.



JD abandoned its pursuit earlier this month after claiming JJB snubbed its requests for information, although JJB countered that the proposal was "highly conditional and lacking sufficient certainty".



As well as the CVA deal, JJB is also turning to shareholders to raise another £65 million in its fight for survival.



It recently said it had secured key support from shareholders including the Bill and Melinda Gates Foundation for the fundraising, while Bank of Scotland is also prepared to extend £25 million in working capital.







JJB will now plough on with revival plans, which involve cutting costs and increasing sales through investing in staff training, upgrading some of its 160 viable stores and improving its ranges.



It has devised plans for three types of stores which will help to tailor its shops to suit their location and will stock more exclusive ranges such as Slazenger Golf and Run 365.



Retail analyst Nick Bubb, of Arden Partners, said today's reprieve will be seen as good news for competition in the sportswear sector.



He said: "The big sports suppliers want JJB to survive to avoid the industry being dominated by Sports Direct International, but it is not clear that consumers do, given how badly the business is trading and the huge losses being incurred."



JJB was saved from going into administration in 2009 after it secured its first CVA, when it ditched 140 stores and arranged to pay rent on a monthly basis at its 250 remaining outlets for a year.



However, the firm has struggled to compete with buoyant rivals JD Sports and Sports Direct International, while the demand for cut-price offers has squeezed its margins.



Pre-tax losses more than trebled to £68.5 million in 2010 and like-for-like sales fell by 15.7% in the group's recent Christmas trading period.

Start your day with The Independent, sign up for daily news emails
Sport
sportWWE latest including Sting vs Triple H, Brock Lesnar vs Roman Reigns and The Undertaker vs Bray Wyatt
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Arts and Entertainment
tvPoldark, TV review
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing