Tuesday, March 24, 2009

Whelan Says He Is Close To JJB Health Club Deal

“Dave Whelan is hoping to announce on Tuesday that he is the owner once more of a slice of the JJB empire, having spent Monday hammering out a deal to buy the retailer’s health clubs ahead of a midnight deadline. Mr Whelan, the founder of JJB Sports who sold his stake in 2007, told the Financial Times in an interview on Monday that a deal was imminent, now that he had unlocked funds from administrators to Kaupthing Singer & Friedlander. However, one person familiar with the process said it was hard to see the sale being announced as soon as Tuesday given its complexity. JJB is simultaneously trying to finalise a deal on lending arrangements with its banks. Mr Whelan – founder of JJB and owner of Wigan Football Club – had more than £40m frozen in an account with Kaupthing Singer & Friedlander. He deposited the funds with the bank in 2007 after selling his 29 per cent holding in JJB for £190m to Chris Ronnie, the now-suspended chief executive of JJB, and Exista, the Icelandic investment company. Mr Whelan said he had been paid a tranche of money a month ago, with the second lump sum released last week. This had enabled him to press on with a deal to buy the 50-strong chain of gyms for about £70m. He will rename the health clubs DW Fitness. The move has irked the Kaupthing Singer & Friedlander Isle of Man Depositors Action Group, which expressed concerns that Mr Whelan had got his money back before other depositors. ‘Our concern is that Mr Whelan has been given preferential treatment by the government,’ it said. Mr Whelan denied the allegation. ‘There has been no preferential treatment from the government as far as I know,’ he said. ‘The Treasury promised all depositors that they would get their money back.’ The sale of the clubs could be crucial for JJB’s survival. Wednesday is quarterly rent day, when it has to pay out millions of pounds to landlords. Its extension to a standstill arrangement on £60m of debt with its three lenders also expires on Tuesday. As part of its efforts to restructure, JJB is also expected to announce that it is entering into a voluntary company arrangement that allows it to avoid insolvency and continue trading by seeking a revised schedule to repay debts.”


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