Blacks poised to contact landlords for lease exits

Blacks Leisure and its advisers KPMG will contact its landlords in the next few weeks with a view to agreeing a company voluntary agreement by November.

Blacks, which is in the middle of a restructuring, is expected to offer landlords six months' rent to withdraw from leases on 89 stores it wants to close. The stores operate under the Blacks, Millets and Freespirit brands.

Blacks said the stores earmarked for closure had held back the business: "The majority of the stores to be closed have not traded profitably for years," it said.

Neither Blacks nor KPMG would comment on the possibility of a CVA.

The plan follows that implemented by KPMG with JJB Sports, the lossmaking retailer, which signed a CVA in April with its landlords, as well as a more recent agreement signed by Focus DIY.

Blacks may also offer to pay empty property rates to landlords that cannot immediately fill the vacated stores, a provision included in both the JJB and Focus agreements.

The British Property Federation, which represents landlords, said Blacks' creditors were likely to agree to the measures if they were fair and reflected the precedent set by earlier CVAs.

Blacks also announced it would look to cut about 50 jobs in its head office in Northampton, and has begun consulting staff in about 400 stores across the UK and Ireland about further redundancies.

The measures follow Blacks' announcement last week that it expected to breach a borrowing agreement with Lloyds Banking Group. Under a "standstill" deal agreed with the bank, Blacks must come up with a restructuring plan by the end of October.

The first element of the restructuring was announced last week, when Blacks said it was putting its Sandcity boardwear subsidiary into administration.

But the group said Wednesday: "Further restructuring is required to satisfy the condition to the standstill agreement, which the company continues to develop with its advisers, KPMG."