JD Sports Fashion Plc Restructuring of Go Outdoors (8500Q)
23 Junio 2020 - 11:24AM
UK Regulatory
TIDMJD.
RNS Number : 8500Q
JD Sports Fashion Plc
23 June 2020
23 June 2020
JD Sports Fashion Plc
Restructuring of Go Outdoors
JD Sports Fashion Plc (the 'Group') advises that, as a
consequence of the challenges caused by the spread of COVID-19, it
is restructuring the Go Outdoors business ('Go') and has today
appointed Michael Magnay and Daniel Butters of Deloitte LLP as
Joint Administrators ('Administrators').
Following the onset of COVID-19, the future viability of the
business has become materially uncertain with the enforced closure
of Go's stores on 23 March 2020 bringing into sharper focus the
operating costs of the business. Specifically, the terms of the
property leases in Go were extremely inflexible with the stores
having an average remaining period to lease expiry of approximately
10 years with upwards only rent reviews, many of which are fixed at
rates above inflation regardless of the market rent in the
location.
Such factors have resulted in the Board deciding that it is not
in the best interests of the wider Group, and its shareholders, to
provide continued financial support to Go in its existing form.
Prior to making this decision, the Board considered a number of
strategic options for Go which included the appointment of advisers
in May 2020 to market the business for a potential sale. The Board
examined the offers made through the marketing process together
with the other options available to it and has ultimately
determined that, if fundamentally restructured, Go has a future in
the Group. Consequently, the Group, via its newly incorporated
subsidiary JD Newco 1 Limited, has subsequently re-acquired the
business and substantially all of the assets of Go from its
Administrators for consideration of GBP56.5 million which returns
to the Group as partial repayment against its historic
indebtedness. This proposal was reviewed and cleared in advance by
the independent Pre Pack Pool.
At the point of administration, Go operated 67 standalone stores
and a trading website. The Group has taken an initial 12 month
licence such that it will continue to occupy all of the Go stores
and, subject to realism and flexibility in the future leases, it is
the Group's intention to retain the majority of Go's retail estate
and preserve as many jobs as possible. It is also the Group's
intention to honour the principal historic liabilities of the Go
business including branded stock suppliers, HMRC liabilities on
taxation, customer returns, and gift cards. Further, all
pre-existing Go employees will transfer across to the new business
with their previous terms and conditions of employment
preserved.
Peter Cowgill, Executive Chairman, said:
"As a consequence of COVID-19, Go Outdoors was no longer viable
as previously structured and would have absorbed capital at an
unsustainable rate for the foreseeable future. Having investigated
all available options for the business, we firmly believe that this
restructuring will provide Go Outdoors with a platform from which
it can progress whilst remaining a member of the Group. Most
importantly, we are pleased that it will protect the maximum number
of jobs possible.
"We look forward to having positive conversations with landlords
and agreeing new flexible lease contracts which reflect the widely
reported challenges of reduced consumer footfall."
Enquiries:
JD Sports Fashion Plc Tel: 0161 767
1775
Peter Cowgill, Executive Chairman
Neil Greenhalgh, Chief Financial Officer
Jennifer Iveson, Investor Relations
MHP Communications Tel: 0203 128
8788
Andrew Jaques
Giles Robinson
Charles Hirst
Catherine Chapman
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END
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