company voluntary arrangements

144 Pages·2009·0.67 MB·English

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any
doubt as to the action you should take, you are recommended to seek your own independent financial
advice from a stockbroker, bank manager, solicitor, accountant or other financial adviser authorised
under the Financial Services and Markets Act 2000.
If you are a member and have sold or otherwise transferred all of your Ordinary Shares in JJB Sports plc
("JJB") please send this document, together with the accompanying documents (but not the personalised
Proxy Form), as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent
through whom the sale or transfer was effected, for delivery to the purchaser or transferee.
This document does not constitute or form any part of any offer or invitation to sell or issue, or any solicitation
of any offer to acquire any Ordinary Shares or other transferable securities in JJB. Any reproduction of this
document, in whole or in part, and any disclosure of its contents, except to the extent such information is
otherwise publicly available, or use of any information it contains for any purpose other than considering the
resolutions is prohibited.

JJB SPORTS PLC
and
BLANE LEISURE LIMITED
and
each of their CVA CREDITORS (as defined herein)

COMPANY VOLUNTARY ARRANGEMENTS
(under Part I of the Insolvency Act 1986)

This document has been prepared solely to inform creditors and members of JJB and Blane of proposals for
company voluntary arrangements. Nothing in this Proposal should be relied upon for any other purpose. Your
attention is drawn to Paragraphs 12 and 13 of Part I (Introduction) of this document describing the desirability
of the Proposal for creditors and recommending why members should vote in favour of the Proposal.
The action required to be taken by you is set out in Part II (Action to be taken by CVA Creditors and Members).
Formal notices of the creditors' meetings and members' meetings to approve each company voluntary
arrangement and Proxy Forms for voting at these meetings, which are to be held at 11:00 a.m. on 27 April
2009 (in the case of each creditors' meeting) and at 11:00 a.m. on 29 April 2009 (in respect of each members'
meeting), are included within this Proposal. For creditors, please complete and return the relevant Voting &
Notice of Claim(s) sent to you with this Proposal in accordance with the instructions set out in it.
A creditor who is a Closed Premises Landlord may not receive a Payment in respect of a Voting &
Notice of Claim filed after the Claims Date. See Paragraph 1 0.3 of Part I (Introduction) for an
explanation of the Claims Date.
Issue Date: 6 April 2009
IMPORTANT NOTICE
DIRECTORS
This Proposal has been prepared by the Directors of each Company pursuant to Part I of the Insolvency Act
solely to inform creditors and members of each Company of proposals for a company voluntary arrangement.
Nothing in this Proposal should be relied upon for any other purpose including in connection with any
investment decision in relation to the debt, securities or any other financial interest of any company in the
Group, including for the avoidance of doubt, any decision to buy or sell or not to buy or sell any debt, securities
or other financial interest. Any parties making such investment decisions should rely on their own enquiries
prior to making such decisions. This Proposal is made in relation to each Company by the Directors of that
Company. Creditors and members should review this Proposal in detail. If you are in any doubt as to the action
you should take in connection with the Proposal, or the tax or other consequences of the proposed
Arrangements for you, you should contact your legal, tax or other professional advisers.
Section 1, Parts I to VI of this Proposal set out a general description of the Proposal and provide a brief
summary of the terms of this Proposal. The binding terms of the Proposal are set out in Section 2, Part VII
(Terms of the Company Voluntary Arrangements).
It is possible that the CVAs may not be approved by the requisite majorities of creditors of the relevant
Companies concerned. The Directors make no representation or warranty and give no undertaking that the
CVAs in the form described in this Proposal will be implemented within the proposed timescale outlined in this
Proposal or at all or that the proposed CVAs may not be amended, revoked or suspended.
Nothing in this Proposal may be taken as an admission of any fact or matter relating to any of the Companies
or relied upon in any litigation involving the Companies or any of them or constitutes any admission on the part
of any Company with respect to any asset to which it may be entitled or with respect to any claim by or against
it.
The contents of this document are not to be construed as legal, business or tax advice. Each creditor and
shareholder should consult his own independent legal, financial or tax adviser for legal financial or tax advice.
This Proposal contains certain statements and statistics that are or may be forward-looking. The accuracy and
completeness of such statements is not warranted or guaranteed. These statements typically contain words
such as "intends", "expects", "anticipates", "estimates" and words of similar import. By their nature, forward-
looking statements involve risk and uncertainty because they relate to events and depend on circumstances
that will occur in the future. Although the Directors believe the expectations reflected in such statements are
reasonable, no assurance can be given that such expectations will prove correct.
Without limiting the generality of the immediately preceding paragraph, all statements contained in this
Proposal in relation to estimated outcomes for creditors, whether as a consequence of the Proposal being
approved or otherwise, are illustrative only. As they are based on assumptions that necessarily involve a
subjective analysis of the matters referred to in this Proposal, they cannot be relied upon as guidance as to the
actual outcomes for creditors.
Unless otherwise indicated, the statements contained in this Proposal are made as at 3 April 2009, being the
latest practicable time before publication, and reflect the circumstances and the information of which the
Directors were aware at that time.
King Sturge LLP has given and not withdrawn its written consent to the inclusion in this document of references
to the advice that it has provided to the Companies and references to its name in the form and context in which
it appears herein.
None of the Directors have authorised any person to make any representations concerning the CVAs which
are inconsistent with the statements contained herein, and if such representations are made, they may not be
relied upon as having been so authorised.
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NOMINEES
The Nominees in relation to the JJB CVA are Richard Dixon Fleming of KPMG LLP, 8 Salisbury Square,
London, EC4Y 8BB and Brian Green of KPMG LLP, St James' Square, Manchester, M2 6DS.
The Nominees in relation to the Blane CVA are Richard Dixon Fleming of KPMG LLP, 8 Salisbury Square,
London, EC4Y 8BB, Brian Green of KPMG LLP, St James' Square, Manchester, M2 6DS and Blair Carnegie
Nimmo of KPMG LLP, 191 West George Street, Glasgow G2 2LG.
In accordance with section 2 of the Insolvency Act, the Nominees have reviewed the Proposal and reported to
the Court or Scottish Court (as appropriate) that, in their opinion:
(a) the Proposal has a reasonable prospect of being approved and implemented;
(b) meetings of the Companies and their creditors should be summoned to consider the Proposal;
(c) the meetings of creditors of each of the Companies to consider the Proposal should be held at 11:00
a.m. on 27 April 2009 at the Royal Horticultural Halls and Conference Centre, 80 Vincent Square,
London SW1P 2PE; and
(d) the meetings of members of each of the Companies to consider the Proposal should be held at 11:00
a.m. on 29 April 2009 at the Royal Horticultural Halls and Conference Centre, 80 Vincent Square,
London SW1P 2PE.
The Nominees are unable to warrant or represent the accuracy or completeness of any information
contained within this document, or any information provided by any third party. The Nominees have
not authorised any person to make any representations concerning the CVAs, and if such
representations are made, they may not be relied upon as having been so authorised.

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SUMMARY OF THE PROPOSAL
The following summary of the Proposal should be read as an introduction to this document only.
Any decision as to how to vote should be based on consideration of this document as a whole and
not just this summary.

Creditors and shareholders of JJB and Blane have been sent a pack of documents in relation to the
proposed company voluntary arrangements announced on 25 March 2009. In addition, JJB
shareholders have been sent a shareholder circular relating to a proposed issue of warrants to BoS.
The main objectives of the proposed CVAs are to:
● compromise claims of landlords of approximately 140 closed retail stores and certain related
contingent claims (such as claims of former tenants and guarantors, but not including rates on
those closed stores)
● enable landlords of those closed retail stores to make a claim against a total aggregate fund of
£10 million, with payments from that fund in two instalments (the first instalment of £5,000,001
on 30 September 2009 and the balance of £4,999,999 on 31 December 2009)
● vary temporarily the terms of leases of the open retail stores, approximately 250 stores in total,
such that rent will be paid on a monthly rather than quarterly basis for a period of twelve months
from the next quarter date
The CVAs do not affect either Company's obligations to Fitness Club Premises Landlords insofar as
those obligations relate to Fitness Club Premises.
JJB and Blane will remain liable for rates on the closed stores until those stores are surrendered /
forfeited or assigned, which shall be at the landlord's discretion. The landlords of the open retail
stores will not be able to claim against the £10 million fund and will not otherwise be paid a fee in
relation to the CVAs. Save as set out above, the CVAs will not seek to compromise claims of any
other creditors.
Throughout the CVA process, JJB and Blane shall continue trading under the control of their
respective directors, operating as going concerns. JJB and Blane are not in and will not be in
administration as a result of commencing the CVA process.
To become effective, the JJB CVA requires the approval of the requisite majority of JJB CVA
Creditors and the Blane CVA requires the approval of the requisite majority of Blane CVA Creditors.
It is a condition of each CVA that it will only become effective if the Implementation Date for both
CVAs occurs.
A company voluntary arrangement also requires the approval of more than 50 per cent. in value of
the company's members present in person or by proxy and voting at a meeting on the resolution to
approve the company voluntary arrangement. However, in accordance with section 4(A)(2) of the
Insolvency Act, if the outcome of the meeting of members differs from the outcome of the meeting
of the company's creditors, the decision of the creditors will prevail, subject to the right of any
member to apply to the Court (in the case of JJB) or Scottish Court (in the case of Blane) to
challenge the approval of the company voluntary arrangement
The CVAs are not conditional upon shareholders of JJB approving the issue of the Warrants to BoS
and the CVAs can proceed if the issue of the Warrants to BoS is not approved.
If the CVAs are approved at the relevant Creditors' meetings and are not then the subject of any
successful challenge, the new financing arrangements will be available to the Group.

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If the CVAs are not approved at the relevant meetings or, if approved but subject to any
challenge, the Standstill may terminate, all outstanding amounts under the Group's existing
debt facilities will become due and payable and the new financing arrangements will not
become available to the Group. In these circumstances, it is likely that JJB and the other
entities within the Group will no longer be able to trade as going concerns which is likely to
result in the appointment of liquidators or administrators.
Your vote on the Proposal is very important. Please take the time to consider the documents that
have been sent to you and take appropriate action, including the return of the relevant Proxy Form.
DOCUMENTS RECEIVED
You will have received the following documents:
1. a letter from the Nominees of JJB and Blane
2. a Voting & Notice of Claim for each Company
3. a Proxy Form for each Company
4. this Proposal, including notices of meetings and, within its annexes, a Summary Statement
of Affairs for each Company
5. the Nominees' comments on the Proposal
There are different coloured and numbered Proxy Forms for the various creditors' meetings and
members' meetings convened to vote on the CVAs. The following Proxy Forms will be in use at
those meetings:
• Green Proxy Forms apply to JJB members and bear number "1"
• Red Proxy Forms apply to JJB creditors and bear number "2"
• Pink Proxy Forms apply to Blane members and bear number "3"
• Yellow Proxy Forms apply to Blane creditors and bear number "4"
NEXT STEPS
If you are a creditor of JJB or Blane, please complete and submit your Voting & Notice of Claim to
KPMG LLP at St James' Square, Manchester, M2 6DS (attention: Brian Green) by 24 April 2009.
If you are a creditor of JJB or Blane and are unable or do not wish to attend your relevant creditor
meeting, submit your Proxy Form(s) to KPMG LLP at St James' Square, Manchester, M2 6DS or
alternatively fax: [phone] (in either case mark for the attention of Brian Green) by 11:00 a.m.
on 24 April 2009.
If you are a member of JJB and are unable or do not wish to attend your relevant member meeting,
submit your Green Proxy Form to Capita Registrars at Proxy Department, The Registry, 34
Beckenham Road, Beckenham, Kent, BR3 4TU by 11:00 a.m. on 27 April 2009.
WHERE TO FIND HELP
If you have not received a Voting & Notice of Claim or Proxy Form for the meeting at which you
wish to vote, please ring the CVA helpline on 0844 815 6067.
Details of how to vote at the meetings and how to make a claim for payments are contained in Part
II (Action to be taken by CVA Creditors and Members) and Part VII (Terms of the Company
Voluntary Arrangements) of this Proposal.
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TABLE OF CONTENTS

Headings Page
SECTION 1: PROPOSAL..................................................................................................................9
KEY DATES AND EXPECTED TIMETABLE OF KEY EVENTS......................................................9
PART I: INTRODUCTION................................................................................................................10
1. DIRECTORS' PROPOSAL..........................................................................................10
2. BACKGROUND TO AND REASONS FOR THE PROPOSAL....................................11
3. DEFINITIONS AND INTERPRETATION.....................................................................12
4. CONTENTS.................................................................................................................12
5. WHAT IS A COMPANY VOLUNTARY ARRANGEMENT?.........................................13
6. WHY ARE COMPANY VOLUNTARY ARRANGEMENTS REQUIRED?....................14
7. CONTINUATION OF OPERATIONS...........................................................................15
8. OBJECTIVE.................................................................................................................15
9. SUPPORT OF LANDLORDS.......................................................................................16
10. CLAIMS AND DISTRIBUTIONS..................................................................................17
11. WORKING CAPITAL STATEMENT............................................................................17
12. DESIRABILITY OF THE PROPOSAL.........................................................................18
13. RECOMMENDATION TO MEMBERS AND CREDITORS..........................................19
PART II: ACTION TO BE TAKEN BY CVA CREDITORS AND MEMBERS..................................20
1. ARRANGEMENTS FOR VOTING AT CREDITORS' MEETINGS..............................20
2. VOTES IN RELATION TO INTER-COMPANY DEBTS...............................................21
3. VOTES IN RELATION TO LANDLORDS....................................................................21
4. ARRANGEMENTS FOR VOTING AT MEMBERS' MEETINGS.................................21
5. CREDITORS AND MEMBERS WITH QUERIES........................................................22
PART III: STATUTORY INFORMATION, BACKGROUND AND FINANCIAL
INFORMATION............................................................................................................23
1. CORPORATE INFORMATION....................................................................................23
2. HISTORY.....................................................................................................................23
3. ASSETS AND LIABILITIES.........................................................................................24
4. CLAIMS BY A LIQUIDATOR.......................................................................................26
5. THIRD PARTY PROPERTY........................................................................................26
6. PROPOSED DURATION OF THE CVAS....................................................................26
7. PAYMENTS TO NOMINEE.........................................................................................27
8. APPLICATION OF FUNDS..........................................................................................27
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PART IV: KEY TERMS OF THE PROPOSAL................................................................................28
1. TERMS OF THE ARRANGEMENTS...........................................................................28
2. PREFERENTIAL AND SECURED CREDITORS........................................................32
PART V: ESTIMATED OUTCOMES FOR CREDITORS................................................................33
1. ESTIMATED OUTCOMES FOR CREDITORS............................................................33
2. WORKED EXAMPLES OF THE METHODOLOGY FOR VALUING THE
CVA CLAIM OF A CLOSED PREMISES LANDLORD................................................34
PART VI: TAX INFORMATION AND TAX DISCLAIMER...............................................................36
1. TAX INFORMATION AND TAX DISCLAIMER............................................................36
SECTION 2: TERMS OF THE PROPOSAL....................................................................................37
PART VII: TERMS OF THE COMPANY VOLUNTARY ARRANGEMENTS..................................37
1. DEFINITIONS AND INTERPRETATION.....................................................................37
2. APPLICATION OF THE CVAS....................................................................................37
3. IMMEDIATELY EFFECTIVE PROVISIONS OF THE CVAS.......................................37
4. CONDITIONS PRECEDENT TO THE CVAS..............................................................37
5. OPERATION OF THE COMPANIES...........................................................................38
6. MORATORIUM............................................................................................................38
7. ESTABLISHING ALLOWED CVA CLAIMS.................................................................39
8. EFFECT UPON EXISTING UNSECURED LIABILITIES OF A COMPANY................39
9. EFFECT UPON PROPERTY LIABILITIES OF A COMPANY.....................................39
10. CPL PAYMENT AMOUNTS.........................................................................................39
11. APPLICATION OF THE CPL PAYMENT AMOUNT....................................................40
12. COMPROMISE OF THE LIABILITY DUE TO CLOSED PREMISES
LANDLORDS...............................................................................................................40
13. PAYMENT OF ALLOWED CLOSED PREMISES CLAIMS.........................................43
14. BLANE LEASES GUARANTEED BY JJB...................................................................43
15. OSC PARENT GUARANTEES....................................................................................44
16. DISPUTED CLAIMS OF CLOSED PREMISES LANDLORDS....................................45
17. COMPROMISE OF THE CONTINGENT PROPERTY CREDITORS CVA
CLAIM..........................................................................................................................46
18. DEALING WITH CLOSED PREMISES.......................................................................46
19. OPEN PREMISES LANDLORDS................................................................................47
20. ASSETS.......................................................................................................................48
21. FULL AND FINAL SETTLEMENT...............................................................................48
22. PAYMENT OF DISPUTED DISTRIBUTIONS AND MISCELLANEOUS
DISTRIBUTION PROVISIONS....................................................................................48
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23. CURRENCY OF PAYMENT........................................................................................50
24. SECURITY...................................................................................................................50
25. POWERS AND INTENTIONS OF THE CVA SUPERVISORS....................................50
26. THE CVA SUPERVISORS' REMUNERATION...........................................................53
27. NO CREDITORS' COMMITTEE..................................................................................53
28. NO WARRANTIES OR REPRESENTATIONS............................................................53
29. RECORDS...................................................................................................................54
30. VACANCY IN OFFICE OF SUPERVISORS................................................................54
31. VARIATION..................................................................................................................54
32. SET-OFF......................................................................................................................55
33. ASSIGNMENTS...........................................................................................................55
34. TERMINATION OF THE CVAS...................................................................................55
35. NOTICES.....................................................................................................................56
36. NO PERSONAL LIABILITY..........................................................................................56
37. GOVERNING LAW AND JURISDICTION...................................................................57
38. EC REGULATION ON INSOLVENCY PROCEEDINGS.............................................57
ANNEX 1: DEFINITIONS AND INTERPRETATION.......................................................................58
ANNEX 2: STATUTORY INFORMATION.......................................................................................67
ANNEX 3: LIST OF FITNESS CLUBS PREMISES........................................................................69
ANNEX 4: LIST OF CLOSED PREMISES......................................................................................73
ANNEX 5: LIST OF OPEN PREMISES...........................................................................................80
ANNEX 6: OUTCOME STATEMENTS............................................................................................95
ANNEX 7: CLOSED PREMISES LANDLORD ASSUMPTIONS....................................................97
ANNEX 8: CVA SUPERVISORS AND ADDRESS FOR NOTICE..................................................98
ANNEX 9: LIST OF GUARANTEES................................................................................................99
ANNEX 10: AVERAGE KPMG CHARGE OUT RATES...............................................................101
ANNEX 11: LIST OF SECURITY...................................................................................................102
ANNEX 12: NOTICE OF MEETINGS............................................................................................109
ANNEX 13: FORMS OF PROXY...................................................................................................114
ANNEX 14: VOTING & NOTICE OF CLAIM.................................................................................118
ANNEX 15: NOTICE OF IMPLEMENTATION DATE....................................................................124
ANNEX 16: NOTICE OF TERMINATION......................................................................................126
ANNEX 17: TERMS OF RENT CONCESSION AGREEMENT.....................................................128
ANNEX 18: SUMMARY STATEMENT OF AFFAIRS...................................................................130
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SECTION 1: PROPOSAL

KEY DATES AND EXPECTED TIMETABLE OF KEY EVENTS

Event Date
Announcement of the Disposal and the CVA Proposal 25 March 2009
Dispatch of CVA documents, Proxy Forms and notices of meetings to 6 April 2009
the CVA Creditors and members
Latest date for return of Proxy Forms and Voting & Notice(s) of Claim for 24 April 2009
the purpose of voting at the Creditors' meeting
Date of CVA Creditors' meeting 27 April 2009
Latest date for return of Proxy Forms for the purpose of voting at the 27 April 2009
Members' meeting
Date of CVA members' meeting 29 April 2009
Anticipated date for chairman of CVA Creditors' and members' meetings 30 April 2009
to file reports with the Court or Scottish Court under section 4(6) of the
Insolvency Act
Earliest Implementation Date of the CVA (representing the end of the 28 28 May 2009
day challenge period under section 6(3)(a) of the Insolvency Act)
Earliest anticipated Claims Date (being the last date for the filing of 25 June 2009
Voting & Notices of Claim)
Earliest anticipated payment date for the first payment to Closed Store 15 October 2009
Landlords (this date may be later depending on the circumstances at the
relevant time, including the existence of any application to challenge the
CVAs under section 6(3)(a) or (b) of the Insolvency Act)
Earliest anticipated payment date for the second payment to Closed 15 January 2010
Store Landlords (this date may be later depending on the circumstances
at the relevant time, including the existence of any application to
challenge the CVAs under section 6(3)(a) or (b) of the Insolvency Act)
Earliest anticipated CVA Termination Date (this date may be later 28 February 2010
depending on the circumstances at the relevant time, including the
status of any Disputed Claims)

Notes:

(1) If any of the above dates change, the revised dates will be notified by announcement through the Regulatory
Information Service of the London Stock Exchange.

(2) All references in this document are to London times unless otherwise stated.

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PART I: INTRODUCTION
1. DIRECTORS' PROPOSAL
1.1 Messrs. Beever, Benzie, Jones, Lane-Smith, Manning and Williams, the directors of JJB
and Messrs. Jones, Manning and Williams, the directors of Blane (together the "Directors"),
propose that the Companies enter into company voluntary arrangements pursuant to Part I
of the Insolvency Act.
1.2 The main objectives of the proposed CVAs are to:
1.2.1 compromise claims of landlords of approximately 140 closed retail stores and
certain related contingent claims (such as claims of former tenants and guarantors,
but not including Rates on those closed stores);
1.2.2 enable landlords of those closed retail stores to make a claim against a total
aggregate fund of £10 million, with payments from that fund in two instalments
(the first instalment of £5,000,001 on 30 September 2009 and the balance of
£4,999,999 on 31 December 2009); and
1.2.3 vary temporarily the terms of leases of the open retail stores, approximately 250
stores in total, such that rent will be paid on a monthly rather than quarterly basis
for a period of twelve months from the Next Quarter Date.
1.3 To become effective, the JJB CVA requires the approval of the requisite majority of JJB
CVA Creditors and the Blane CVA requires the approval of the requisite majority of Blane
CVA Creditors. It is a condition of each CVA that it will only become effective if the
Implementation Date for both CVAs occurs.
1.4 A company voluntary arrangement also requires the approval of more than 50 per cent. in
value of the company's members present in person or by proxy and voting at a meeting on
the resolution to approve the company voluntary arrangement. However, in accordance with
section 4(A)(2) of the Insolvency Act, if the outcome of the meeting of members differs from
the outcome of the meeting of the company's creditors, the decision of the creditors will
prevail, subject to the right of any member to apply to the Court (in the case of JJB) or
Scottish Court (in the case of Blane) to challenge the approval of the company voluntary
arrangement.
1.5 The Nominees in relation to the JJB CVA are Richard Dixon Fleming of KPMG LLP, 8
Salisbury Square, London, EC4Y 8BB and Brian Green of KPMG LLP, St James' Square,
Manchester, M2 6DS.
1.6 The Nominees in relation to the Blane CVA are Richard Dixon Fleming of KPMG LLP, 8
Salisbury Square, London, EC4Y 8BB, Brian Green of KPMG LLP, St James' Square,
Manchester, M2 6DS and Blair Carnegie Nimmo of KPMG LLP, 191 West George Street,
Glasgow, G2 2LG.
1.7 The purpose of this document is to provide you with information about the background to
and reasons for the proposed entry into company voluntary arrangements pursuant to Part I
of the Insolvency Act, including information about the terms of such arrangements, to
explain why the Directors consider the arrangements to be desirable for creditors and in the
best interests of each Company and its shareholders as a whole.
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