Sports retailer JJB Sports has secured the required funding to keep the company afloat as long as the its creditors and shareholders agree its company voluntary agreement (CVA), it was confirmed today.
Its major shareholders have agreed to £65 million capital raising and the Bank of Scotland has committed to the provision of the £25 million in working capital, both conditional on the CVA passing on March 22nd at an arranged meeting.
Trading for the retailer meanwhile has continued to fall, with like-for-like sales between January 24th and March 13th 2011 decreasing by 13.5 per cent year-on-year and total group revenue falling over the same period by 14.6 per cent.
In a statement issued today the company stated that it was confident that its revised business model would “re-establish and promote JJB as a trusted sports retail brand”.
Mike McTighe, JJB Chairman, said: “JJB’s restructuring continues as planned. The proposed £65 million capital raising and the continuing support from our major shareholders and our lender, Bank of Scotland, will provide us with the working capital we believe we need to implement our revised business plan.
“The whole management team remains focused on this restructuring and committed to delivering a stable future for JJB and its employees.”
Despite the continued downturn in sales JJB says that trading is in line with expectations and that once the refinancing of the company is complete it can look to rejuvenate its stores.
It plans to improve its store portfolio, with 43 stores closed in the next year if the CVA is passed, and product proposition, continue to develop its multi-channel offering and strengthen its people and service offering.
The support of its major shareholders - Harris Associates, Crystal Amber, Invesco Asset Management and Bill & Melinda Gates Foundation Trust – has offered a lifeline to the firm but everything now depends on the CVA being agreed next week.
Capital Shopping Centres, one of JJB’s creditors, has already come out against the agreement which will see as much as £7.5 million paid to landlords as a sweetner in exchange for dropping monthly payable lease rates by 50 per cent.
“We continue to engage with all of JJB’s stakeholders, including landlords, shareholders, our lender, suppliers and our colleagues,” McTighe added.
“Today’s announcement is the result of this ongoing dialogue and we are continuing to build real momentum among this ‘coalition of the willing’.
“The next key stage in the process is the creditor and shareholder votes next week. The Board remains confident of the success of this turnaround and the future prospects for the Company.”
JJB says it is pleased by the performance of its six transformed stores opened in November 2010, with their sales up 16 per cent on company average since it then, and it plans to roll-out successful elements of these outlets to its remaining properties once its financial matters are settled.
Current net debt for the company stands at £9.1 million, and overall gross margin has reduced to 36.3 per cent from 40.4 per cent in the six weeks to March 13th.