Borders moves toward financing, but doesn't rule out bankruptcy
The struggling Borders Group, known to shoppers as Borders Books and Music, has secured $550 million in financing from G.E. Capital Corp., as long as certain requirements are met. However, some of those requirements may not be acceptable to publishers.
Borders has been meeting -- so far, inconclusively -- with publishers' representatives in an effort to persuade them to turn back payments into loans. The N.Y. Times reports:
The goal has been for publishers to take up one-quarter to one-third of Borders’ reorganized debt, but the exact percentage has not yet been determined, people briefed on the matter previously said. These people spoke on condition of anonymity because they were not authorized to speak publicly on the matter.
But publishers said this week that they remained hesitant to accept Borders’ preliminary offer. Several publishers that have negotiated with Borders as a group said that the bookseller had still not presented a viable plan to move the company forward.
Publishing industry watcher Publishers Weekly notes that Borders' latest statement -- which mentions "the possibility of an in-court restructuring" -- indicates that bankruptcy may be a possibility.
In a statement, CEO Mike Edwards said that while Borders believes refinancing is the most practical route to revitalize the company “given the current environment surrounding Borders, and in order to assure that the company can pursue its efforts to position itself to properly implement its business plan, it is prudent as well for Borders to explore alternative avenues, including the possibility of an in-court restructuring.” Borders wasn’t commenting beyond the release, but the wording suggests that a prepackaged bankruptcy is a possibility.
Borders, which has not turned a profit in four years, has been closing stores in an effort to cut costs. Closures include Borders stores on La Cienega Boulevard and in Westwood.
-- Carolyn Kellogg
Photo: Borders Books and Music in Glendale. Credit: Gary Friedman/Los Angeles Times