Landlords respond to JJB CVA as crunch talks loom
The British Property Federation (BPF) has welcomed proposals that would see landlords share in JJBs future profits following the publication of the troubled sportswear retailers bid for a second company voluntary agreement this week.
JJB have disclosed details of the CVA, which if ratified by creditors and shareholders at a meeting on the 22 March, will see 43 stores close before the 24 April next year and a further 46 under review until the same date in 2013.
The BPF has argued throughout the CVA process that should the CVA be passed and JJB return to profit then landlords should receive a share of its future success in exchange for helping the business survive.
The clawback proposal offers landlords “an additional payment of between £2.5 million and £7.5 million (to be settled in cash or ordinary shares in the Company at the option of the Company) to compromised landlords that is linked to the market performance of JJB and is payable on 24 April 2013 (or earlier in the event of a takeover offer or certain other specified events).”
The latest CVA will require 75 per cent of creditors to be in agreement or it will not be passed. This follows JJB’s first CVA in April 2008 which resulted in 140 stores closing and leases renegotiated on the remaining 250 stores.
Liz Peace, chief executive of the British Property Federation, said: “JJB’s offer to give landlords a share of its future profits shows it has listened to our concerns, but whether the sums proposed – up to £7.5m across 90 stores – are sufficient to sway landlords’ votes remains to be seen.
“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.”
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