JJB bank deal to cost £8m in fees

JJB has warned of losses and falling sales

Struggling British sportswear retailer JJB Sports said it has paid £8m in fees as part of a deal it struck with its lenders last month.

The payment to Barclays, HBOS and Kaupthing was expected to be made in February and April, it said on Monday.

The December deal meant the £20m loan from Iceland's Kaupthing does not need to be repaid until the end of January.

News of the extra fees sent its shares down 29%, valuing the firm at £17.8m - or less than two weeks' sales.

The Wigan-based retailer has suffered from tighter profit-margins and lower sales.

It said this month that losses could reach £10m this year and revealed that like-for-like group sales - which strip out new store openings - fell 6.8% in the five weeks to 11 January.

'Constructive discussions'

"Barclays, HBOS and Kaupthing remain supportive of the company under the leadership of David Jones," JJB said in a statement.

Earlier this month Mr Jones was promoted to the post of executive chairman of the 400-store group.

His task is to rescue the company and he immediately started a comprehensive review of the business.

JJB said it was in "constructive discussions" with its lenders over financing to support the firm.

Meanwhile, JJB's chief executive, Chris Ronnie, was poised to step down from the ailing retailer this week, it was reported on Monday.

It emerged last week that Mr Ronnie no longer owned his 27.5% stake in the firm.

Mr Ronnie had used the shares as security against loans from Icelandic bank Kaupthing - now in administration -when he and Icelandic group Exista bought the stake from JJB founder David Whelan last year.

The shares are now held by the administrators for the UK and Isle of Man units of Kaupthing.

JJB is also sending out details to potential buyers of its health clubs, leaving management to concentrate on turning around the main sportswear chain.