STOCKS NEWS UK SMALL-JJB soars on gyms disposal report

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12:48GMT 13Mar2009-JJB soars on gyms disposal report

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Shares in JJB Sports (JJB.L), the struggling British sportswear retailer, soar as much as 32 percent to 12.7 pence after a report in the Daily Telegraph said Dave Whelan, the group's founder, is set to pay 60 to 70 million pounds for its fitness clubs business.

JJB needs to sell the 50-strong fitness clubs chain as it owes its lenders -- HBOS (LLOY.L), Barclays (BARC.L) and Kaupthing about 60 million pounds.

The firm's standstill agreement with the banks expires on Monday and is conditional on it making progress on the disposal of the fitness clubs.

David Stoddart, analyst at Altium Securities, said 60 to 70 million pounds might be enough to secure JJB's survival.

"It depends on what you think the profitability and cashflow profile of the remaining business is," he said, noting that JJB also faces a second quarter rent bill of about 20 million pounds, due at the end of March.

JJB declined to comment.

Reuters messaging rm://james.davey.reuters.com@reuters.net

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