JJB fitness clubs could be sold within 24 hours

Mar 24 2009 by Peter McCusker, The Journal

AILING retailer JJB Sports could complete the sale of its fitness clubs within the next 24 hours.

A £70m sale to JJB founder and Wigan Athletic chairman Dave Whelan is likely to be completed before “Quarter Day” tomorrow, when the company’s multi-million pound rent bill is due.

This is despite fellow Premier League tycoon Mike Ashley’s reported attempts to poison the deal by writing to JJB’s landlords and urging them not to do business with Mr Whelan.

The Newcastle United boss is understood to have asked the creditors to let him take over the leases instead, after he missed out with a bid for the fitness clubs late last year. Mr Ashley’s company Sports Direct International declined to comment yesterday.

Mr Whelan, who set up the Wigan-based retailer in the 1970s but sold his stake in 2007, is said to be planning to rebrand the gyms as DW Fitness.

Securing the sale of the 52 health clubs is vital to the future of JJB, which owes £60m to lenders Barclays, HBOS and Kaupthing. JJB is believed to be considering entering into a Company Voluntary Arrangement (CVA) with landlords, which would allow it to continue trading while only paying back part of the rent.

Under a CVA, JJB would have to draw up a revised schedule to pay off debts, which could involve sacrificing up to 40 stores. JJB’s footwear chains Qube and the Original Shoe Company are already in administration with the loss of 400 jobs.

The company has warned of losses of up to £10m for the year to the end of January, while its share price has plummeted 87% in 12 months.