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JJB Sports lives to fight another day

JJB Sports has been given another stay of execution while the group's bankers insist that the fitness club operation needs to be sold off. A previous banking agreement expired today although it has been extended to 16 March at which point the matter will be reviewed again. While this is good news in the short term there are still serious concerns about the long-term viability of JJB Sports which has been severely impacted by the spending downturn on the UK high street.

The company is said to owe in the region of £75 million to its bankers and while they have had offers for the gym business they are rumoured to have been in the region of £35 million-£55 million which is well short of the company's £100 million valuation. The fact that offers are being made which are well under the "market value" shows how difficult the UK leisure sector is at the moment and the distressed value which is being placed on many assets.

The company has been undertaking a major review of all non-core businesses with a view to potential disposals to raise funds to pay off part of the company's substantial debt. The group is also rumoured to be have agreed to pay lenders a fee of around £8 million in order to reschedule and rearrange the company's finances.

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