3 March 2011
Last updated at 08:34 ET
Retailer JJB Sports has asked the landlords of its struggling shops to agree to a plan to try to prevent it from going into administration.
They have been offered up to £7.5m if they agree to the proposals, which include lower rent payments.
Up to 89 stores could close under the proposed changes to the property portfolio, JJB said.
JJB chairman Mike McTighe told the BBC that he was “confident” the turnaround plan would work.
But he said its success depended on the support of landlords, shareholders and its bank, and he urged them to “stick with us”.
In a statement, the sportswear firm said 43 stores would close over the next year. It will also review the performance of 46 more, which could close if they do not improve by April 2013.
The landlords of these “compromised stores” have been offered extra payments of between £2.5m and £7.5m, depending on how JJB performs over the next two years.
Landlords would have the option of taking back their stores from JJB, its accountants KPMG said.
But KPMG said they would get much better returns under this Company Voluntary Arrangement (CVA) than if the company went administration.
If it went under, creditors could expect to get back just over 1 pence in the pound, whereas the CVA offered returns of up to 29.2p in the pound.
Retailers such as Primark have recently expressed concern about the outlook for the UK High Street with the economic recovery remaining slow.
Mr McTighe told BBC News this should not derail JJB’s restructuring as it had put together a “fairly cautious plan”, and firm would concentrate on cutting costs and improving its margins.
See the article here:
JJB unveils property rescue deal