Feb 11, 2011
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JJB to shut more shops in bid to keep on running

Feb 11, 2011

Feb 11 - Struggling sportswear retailer JJB Sports said it plans to close another 45 stores as it proposed a second company voluntary arrangement to creditors in as many years to keep the business afloat.


The firm, in which America's richest man Bill Gates holds 5.5 percent, said approval from shareholders and creditors of its new CVA would let it continue trading while striking a deal with landlords to close stores and pay only part of the rent.

Last week, JJB said it had been approached by thriving rival JD Sports Fashion about a takeover and confirmed plans for emergency fundraising of 31.5 million pounds.

JJB again cautioned on Friday it required a larger capital raising, in addition to the 31.5 million pounds, to survive.

It warned it would "no longer be able to trade as a going concern, which would result in the appointment of receivers, liquidators or administrators," without this additional cash.

Shares in JJB, which have more than halved in value over the last three months, were up 1 percent at 4.5 pence at 1:20 p.m., valuing the business at about 44 million pounds.

JJB was driven to the brink during the recession, but survived thanks to a deal to sell its fitness clubs to founder Dave Whelan, an earlier CVA that saw it close 140 stores, new banking facilities and an earlier equity fundraising.

In addition to 45 stores identified for closure, its latest CVA would see 50 stores put under review for possible closure and a core group of 150 stores retained.

"We are confident that, with the support of our key stakeholders, we can complete this restructuring in the coming weeks," said JJB Chairman Mike McTighe.

To become effective, JJB's proposals need the backing of 75 percent of unsecured creditors and 50 percent of shareholders.

JJB's talks with JD were described as "highly preliminary." Analysts are sceptical a deal will emerge given that JD may prefer to wait and see if JJB survives.

(Editing by David Hulmes)
(Reporting by James Davey and Rhys Jones; Editing by Hans Peters)

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