JJB offers landlords £7.5m as sweetener for closing up to 89 stores

STRUGGLING JJB Sports yesterday offered its landlords a payout of up to £7.5 million if they accept a deal that could see scores of the sportswear retailer's stores close to avoid it going into administration.

JJB wants to close 43 of its 246 stores by 24 April, 2012, while a further 46 stores could be closed by 24 April 2013 if their performance does not improve.

Under the published terms of JJB's second company voluntary arrangement (CVA) in two years, the landlords of the 89 stores would also see their rent income cut 45 per cent.

Several landlords had expressed concern, but JJB's sweetener yesterday said they would receive cash or shares worth between 2.5m and 7.5m in April 2013 depending on the company's trading performance.

Wigan-based JJB said the deal was necessary to keep it from collapse as it struggles to compete with buoyant rivals JD Sports Fashion, with whom it is in takeover talks, and Sports Direct International. It said the CVA is part of a turnaround plan that will also involve the latest in a series of cash calls from investors to allow the business "to move forward on a far sounder footing".

Last month JJB raised 31.5m from its five biggest shareholders, including the Bill & Melinda Gates Foundation Trust, after tapping investors for 100m just over a year ago.

It has also warned it needs to raise at least another 31.5m from shareholders by end-June and will release further details before 22 March when both shareholders and creditors will vote on its plans. JJB's shares shed 15 per cent, or 3.25p, to 17.75p yesterday.