The sporting goods firm, founded by Dave Whelan in 1971, went into administration last night following weeks of fruitless searching for a buyer. JJB’s share price dropped to less than a penny before trading was finally suspended last week as the firm readied itself for a pre-pack administration. Pre-packs effectively write off much of a company's debt.
Rival firm Sports Direct, run by entrepreneur Mike Ashley, has agreed to snap up 50 of JJB’s stores for £24m, saving 550 jobs, but the Wigan-based business has failed to find a buyer for the rest of its portfolio, despite initial interest from more than 100 parties, including the Whelan himself. The remaining 133 stores are to close immediately.
‘Successive attempts to restructure the business, both financially and operationally, have not been enough to prevent the company falling into administration,’ explained Richard Fleming, UK head of restructuring at KPMG, JJB’s administrator.
This is the ultimate fall from grace for JJB Sports, which was worth £1bn in its heyday. KPMG will now mastermind the sale of all of JJB’s remaining assets in an attempt to pay off some of JJB's £45m debt to its main lender, Lloyds Banking Group and its other secured creditors, US group Dick's Sporting Goods and Adidas. Although Dick’s has already admitted it is writing off its entire investment.
Despite its untimely demise, JJB does still own some lucrative contracts and property. Sports Direct has already called dibs on all of JJB's stock and its Slazenger Golf brand licences. Ashley’s outfit has also bought JJB’s company's headquarters in Wigan.
Speaking to the BBC today, Whelan mourned the loss of the company he built up over three decades. ‘When I sold it five years ago, it was valued at a billion pounds.,’ he said. ‘Now it's completely worthless and it's amazing how it's happened.’