JJB SPORTS was heading for a battle with its landlords and other retailers after confirming its company voluntary agreement (CVA) is to include the renegotiation of two-fifths of its rent payments.
The company has warned its biggest landlords, including British Land, Henderson and Prudential, that if its terms for discount rent and tenancy breaks for loss-making shops are not accepted, the entire firm will go down.
The struggling sports retailer, which used a similar tactic when faced with bankruptcy in 2009, is also looking to close 45 stores this year and a possible 50 further outlets by the end of 2012.
KPMG, which is advising JJB, has begun talks with landlords and hopes to reach a deal within weeks.
The Wigan-based firm needs to win support for the CVA from three-quarters of its unsecured creditors and half of all shareholders to avoid administration.
Liz Peace, chief executive of the British Property Federation, said the deal could face stern opposition from property owners. “What has concerned landlords are past cases where a retailer had released a store through a CVA and then returned to the same locality shortly afterwards to take a new store on reduced rent,” she said.
Meanwhile, one large retailer has threatened to withhold its own rent payments if landlords accept JJB’s terms, according to the weekend reports.
The unnamed retailer is said to have called an emergency meeting with other high street names to fight JJB’s plans.
Rival sportwear firm JD Sports is thought to have put its takeover advances on hold while JJB garners support for its CVA rescue package.
In December, investors including Bill Gates backed a £31.5m fundraising to keep JJB Sports alive after dire trading in the run-up to Christmas, but the firm has warned that further cash injections will be needed.
The firm’s lender, Bank of Scotland, has already agreed to give the it leeway in regards to its existing debt facilities.