Beleaguered sports retailer JJB Sports has today set out the details of its company voluntary agreement (CVA) which could see 89 stores closed in the next two years.
In order to avoid administration the firm has proposed that if agreed, only 50 per cent of the monthly rate payable on the leases of those properties considered for closure will be paid, arguing that landlords of compromised stores will receive a greater rate of return than if the company went under.
A confirmed 43 stores have been identified for closure before April 24th 2012, and a further 46 stores will be reviewed before possible closure by April 24th 2013.
An additional payment of between £2.5 million and £7.5 million will be offered to those landlords involved, depending on the continued performance of JJB stores.
Mike McTighe, Chairman of JJB, said: “Today we are laying out the full terms of our CVA proposals and preparing the way for creditor and shareholder meetings later this month.
“In formulating these CVA proposals we have talked to our landlords and listened to their views.
“Before the shareholder and creditor meetings, we intend to release details of the anticipated funding requirements of a restructured JJB and our new business plan, together with the key terms of our second capital raising that will deliver the longer term financing required to
enable the group to move forwards on a far sounder footing.”
JJB plans to transfer its ordinary shares from the Official List of the London Stock Exchange (LSE) to AIM by April this year and has hired Numis Securities Limited to advise on the move.
AIM is a sub-market of the LSE which provides smaller companies with more flexibility to raise capital due to it having less regulation and no requirement for capitalisation or number of shares issued.
The retailer may struggle to convince its landlords to approve the new deal, with Capital Shopping Centres already confirming that it opposes the move, and the details of the deal were delayed due to extended negotiations with creditors.
McTighe added: “There remains much to be done, but we have achieved some significant success in recent weeks, and are hugely grateful to all our key stakeholders who have shown us so much support.
“With their continued backing we remain confident about the future of this business.”