JJB Sports Likely To Break Loan Terms

Tue, 07 Dec 2010

JJB Sports, one of the UK’s largest sportswear retailers, has warned that is likely to breach the terms of its bank loans next month.

The company, which has been hit by poor trading conditions, admitted last week that it expects to break borrowing terms in January and is engaged in refinancing negotiations with its banks .

JJB has a £25m loan facility with Bank of Scotland, and now believes that its current trading performance means it will not have kept within the terms of the loan when the lender re-assesses the situation at the end of January.

"The company is actively engaged in constructive discussions with Bank of Scotland and their advisers in relation to the testing of these financial covenants and more generally in relation to the future financing of the business," it said.

The troubled retailer, which was on the brink of bankruptcy last year, added that it expects the challenging trading conditions to be "further exacerbated by current adverse weather conditions".

Analysts claim the group is suffering from a step-up in promotions from rival firm Sports Direct, which is controlled by Newcastle United owner Mike Ashley.

Last month, JJB issued a profit warning and confirmed that full-year results would not meet its expectations.
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