JJB Sports second CVA has had the backing from the creditors. In an announcement they said that the deal was approved by more than 75% of the creditors. Must have been close!Using a CVA solely as a way of dumping unprofitable stores was no doubt debated. It is our view that this was not the purpose of the CVA rescue mechanism. JJB wanted its landlords to accept a cut in rents by up to 55%. It also plans to close 43 stores by April next year and possibly another 46 later, and hopes to raise around £65m with an equity issue.
Commenting on the approval of the CVA Proposal by creditors, Mike McTighe, Chairman, 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"
This demonstrates again what a powerful rescue tool the CVA is. However we understand that landlords can be compromised unfairly so it is important that they buy into the proposal and can benefit if the retailer's fortunes improve.
A further announcement is expected today giving more details.