(Corrects to "company voluntary arrangement" from "company voluntary administration" in third paragraph; also adds missing word "agree" in first bullet point)
* 99 percent of JJB creditors agree new terms for leases
* Decision staves off administration
* Shares up 41 percent
* Deal sets precedent for other British firms
(Adds detail, quotes, background)
By James Davey and Tom Freke
LONDON, April 27 (Reuters) - Sportswear retailer JJB Sports Plc became the first British company to stave off administration by agreeing new, easier terms with its landlords on Monday.
JJB shares leapt 41 percent to 25.75 pence after creditors approved plans to change the terms of leases. A rejection would have pushed the company into administration.
JJB needed three-quarters of its unsecured creditors, mainly trade suppliers and landlords, to approve the company voluntary arrangement (CVA) first proposed on April 7.
"The meeting itself was a resounding success with 99 percent of creditors voting in favour," said Richard Fleming of KPMG, which advised JJB on the deal.
The British Property Federation (BPF), representing many of Britain's biggest real estate firms, said it was pleased with the result. "We hope the open and honest manner under which the CVA was worked up can become a benchmark for any future agreements," said Liz Peace, chief executive of the BPF.
The CVA would see JJB settle the claims of landlords of about 140 closed stores and move from quarterly to monthly rent payments on about 250 stores, easing the pressure on cash flow.
JJB shareholders will vote on the CVA on Wednesday but even if they oppose the deal the decision of creditors will prevail.
The CVA proposal is expected to become effective by the end of May, unless a legal challenge emerges.
JJB agreed 50 million pounds ($73 million) of new bank loans if creditors approved the CVA proposals.
REFUSED DEALS
Landlords have previously opposed deals that see them accept worse terms on lease agreements. However, the parlous state of the British retail sector has focused the industry on keeping tenants afloat.
"It is clearly in our interests for our tenants to survive, thus reducing any potential exposure to empty rates," said Francis Salway, chief executive of Land Securities and president of the BPF.
"However, we need to ensure that such practices are only entered into when a firm is at the point of insolvency and not before," Salway said.
In the first quarter of 2009, 705 British retailers fell into insolvency, PricewaterhouseCoopers said on Friday.
British shoe retailer Stylo, parent of Barratt and Priceless Shoes, went into administration in February after its CVA failed to win the support of creditors.
"Property owners often feel that insolvency practitioners are playing landlords off against each other, but in this case KPMG must be commended for the way they have dealt with things," said Peter Best, head of asset management at real estate firm Prupim.
KPMG's Fleming said the approval of the CVA set a precedent not just for retailers but for other listed firms, and reflected "a growing sense" that creditors should offer a struggling company more pre-administration options.
"Administration, which, while an essential tool in the restructuring kit, should be viewed as the option of last resort due to the damaging effect it can have on a company's value," Fleming added.
JJB founder Dave Whelan sold his stake in JJB in 2007 to a joint venture between JJB's former chief executive Chris Ronnie and Icelandic financial group Exista, triggering two years of ownership changes at the company and management turbulence. (Editing by Dan Lalor) ($1 = 0.6869 pound)