Landlords support JJB restructuring plan
The company needed the support of 75% of creditors by value for its second Company Voluntary Arrangement (CVA) in two years, which will allow it to close 43 stores within the next 12 months and potentially close a further 46 stores within two years.
Creditors voted in favour of the plan at a meeting this morning. Speaking after the vote, JJB Sports' chairman Mike McTighe said: "I am delighted that our CVA proposals have been approved at the creditors' meetings held earlier today.
"JJB continues to develop strong relationships with its landlords who have supported the Company in this process, and we look forward to working with them, alongside all our stakeholders, as we continue to achieve crucial milestones in our turnaround."
Richard Fleming, UK Head of Restructuring at KPMG and ‘supervisor’ of the CVA, commented: “While the CVA is but one element of JJB’s plan to turn its fortunes around, it is a vital cog in the mechanism that will put the business in a stronger operational position and, ultimately, avoid administration. The proposal process has given both the company and its creditors the opportunity to agree a compromise that is mutually acceptable. We estimate that the landlords accepting a reduced rent can expect to see a substantially larger return via the CVA than in the alternative of administration: 24.6p to 29.2p in the £1 versus 1.1p in the £1.”
Brian Green, restructuring partner at KPMG and ‘supervisor’ of the CVA, added: “We have worked hard to improve the CVA model and - while a CVA must always offer a better return to creditors than administration - we have also been mindful of specific concerns voiced by the landlord community. To this end, the landlords have welcomed the opportunity to share in the upside of the turnaround via the ‘clawback’ mechanism.”
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