JJB’s creditors back rescue deal

Retailer JJB Sports has secured backing from the landlords of its struggling shops for a plan to try to prevent it from going into administration.

They approved changes to JJB’s property portfolio allowing it to close up to 89 stores over the next two years.

The landlords had been offered up to £7.5m if they agreed to the proposals, which include lower rent payments.

JJB chairman Mike McTighe has said he is “confident” the turnaround plan will work.

JJB said the proposed company voluntary arrangement (CVA) was approved, without changes, by a majority of more than 75% of unsecured creditors.

Redesign plan

This will now allow the sportswear firm to close 43 of its 250 stores over the next year. JJB 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.

They have also agreed to accept rent at 55% of current levels on the 89 stores in question. This will now be paid on a monthly basis instead of quarterly.

JJB can now pursue its plans to revamp the chain, which will be financed with the proceeds of a £65m fundraising from shareholders and a £25m loan agreement with Bank of Scotland.

This will be based around the success of six trial stores, which have been refocused to appeal to keen amateurs and sporting families.