JJB Sports landlords offered incentives to back recovery plan

Landlords of JJB Sports are being offered about 25p in the pound as part of the retailer's company voluntary arrangement (CVA), which could see 89 stores close. The CVA will see 43 stores closed on or before 24 April next year. A further 46 will be put under review and could be closed by the same date a year later. JJB wants to pay half the rent due on the 89 stores, as well as a sum for "dilapidations". The landlords affected by the arrangement could also receive a further £2.5m to £7.5m if JJB does well over the next two years. JJB's adviser KPMG said that overall, the deal would amount to about 25p in the pound. Richard Fleming, KPMG's UK head of restructuring, said: "The CVA proposed by JJB gives the company a chance to avoid administration and carry out a fundamental restructuring of its property portfolio. A CVA must always offer a better return to creditors than administration and in the case of JJB we estimate the return to compromised landlords to be within a range of 24.6p to 29.2p in the pound, versus 1.1p in the pound in administration." The return is a combination of the 50% rent, rates JJB will pay once the stores are closed until new occupants can be found, and the possible extra payment. It is understood that landlords affected have claims worth £90m, meaning they will get just over £20m by backing the plan. Creditors will vote on the proposals on 22 March. JJB's chairman, Mike McTighe, said: "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 £7.5m, 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."