The British Property Federation has welcomed proposals that would see landlords share in JJB’s future profits, following the publication of the troubled sportswear retailers’ bid for a second company voluntary agreement.
“JJB’s offer to give landlords a share of its future profits shows it has listened to our concerns, but whether the sums proposed are sufficient to sway landlords’ votes remains to be seen,” says Liz Peace, chief executive of the British Property Federation, which represents 380 members.
“Landlords and their shareholders – many of whom invest on behalf of pensioners – lose out through every CVA.
“These ‘clawback’ clauses should therefore be included in almost all CVAs as a matter of course.
“However, it must be remembered that this is JJB’s second bite of the cherry.
“JJB disposed of 140 stores through its last CVA two years ago, and so any creditor will be seeking reassurance that this is a lasting solution to the company’s problems.”
JJB Sports is offering landlords up to £7.5 million as an incentive to accept its CVA in which it proposes to close 43 of its 246 stores by April 24, 2012, with the possibility of a further 46 closures by April 24, 2013.
As well as the one-off payments, which would be due on April 24, 2013, landlords are being offered 50 per cent of the monthly rent prior to closure, plus five per cent for ‘dilapidations’.
“JJB’s restructuring plans are on track,” says chairman Mike McTighe.
“Last week we completed the first capital raising to provide short-term finance for the group and delivered our revised business plan to Bank of Scotland.
“In formulating these CVA proposals, we have talked to our landlords and listened to their views.
“As a result, we are offering them a possible share in the value of a restructured JJB of up to £7.5 million, payable in two years time.
“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.
“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.”
JJB’s plans need the backing of 75 per cent of unsecured creditors and 50 per cent of shareholders.
