JJB Sports FD to resign

The finance director of
JJB Sports David
Madeley is to resign from the stricken sports retailer as part of an emergency
restructuring, including a ‘company voluntary arrangement’ proposal to help it
meet rent payment for its stores.

The company, which began with a single store in Wigan in 1971, has announced
Madeley’s ‘intention to resign’ as a part of a series of measures to stave off
financial collapse.

Peter Williams, an executive director at the company, will take
responsibility for the finance function until a new FD is found.

JJB also announced a disposal of its Fitness Clubs business for of £83.4m in
cash and a CVA to ‘compromise claims of landlords’ of about 140 closed retail
stores and to ‘temporarily vary’ the terms of the leases of about 250 open
retail stores to permit monthly rent payments.

JJB executive chairman, David Jones, said: ‘In announcing our series of
measures … we have taken the first step in securing JJB’s long-term future after
months of speculation. We have worked very hard with our advisers and lending
banks to propose a robust, solvent restructuring of the group that we believe is
in the best interests of all of our stakeholders.

‘In addition to the continued support of our lending banks, our proposals
require the approval of our unsecured creditors and our shareholders. Their
support of our CVA proposal will ultimately allow us to focus on realising the
full potential of the company’s core sports retail business.’

However, JJB’s CVA proposal is likely to face opposition from retail
landlords. Earlier this month, parent of shoe retailers Barratts and Priceless,
Stylo, saw their attempts to broker a CVA through subsidiary companies torpedoed
by their landlords.

Retailers have campaigned for landlords to switch to monthly rent, if
requested by businesses, rather than the standard quarterly payment.

Richard Fleming, KPMG’s UK head of restructuring, and proposed ‘supervisor’
of the CVA, said the offer was a fair compromise between JJB’s operational needs
and the landlords’ rights under tenancy agreements.

‘Combined with the disposal of the health club business and the continued
lender standstill, the proposed CVA gives JJB the opportunity to preserve
trading stores and around 12,000 jobs,’ Fleming said. ‘The CVA proposal is
asking the landlords of the unoccupied stores to come to a compromise on the
company’s financial liability.

‘We have a pot of around £10m that landlords can claim against, which should
mean that, on average, landlords receive over 6 months’ rent each.’

He said KPMG would discuss the CVA proposal with landlords over the next few
days and announce a detailed proposal on Monday.

Earlier this week the British Retail Consortium warned that deteriorating
economic conditions meant that this quarter’s rental demands were the toughest
quarter rental payments faced by retailers for ‘at least 18 years’.

The BRC has called for the abolition of ‘upward-only’ rent clauses, which
allows landlords to increase rents each year regardless of economic conditions.
It has also asked the government to put an immediate freeze on all new business
rates burdens.

By the end of this year 140,000 shops will be vacant and 200,000 retail jobs
will have been lost, according to Experian, the BRC said.

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