More distressing (though not surprising) news . . .
Borders Group Inc. (BGP), the bankrupt book chain, is seeking at least $50 million in additional financing as sales trail expectations and publishers demand cash in advance, said two people who have seen the chain’s plans to reorganize.
The funds are needed to help Borders emerge from its in- court restructuring, said the people, who declined
to be identified because the process isn’t public. The retailer already has a $505 million debtor-in-possession loan, which offers sufficient capital for the next few months, the people said. The retailer may risk liquidation without further investment, easier terms from vendors or a buyer, they said.
Some publishers are spurning the reorganization the chain proposed to them privately, said a person familiar with the publishers’ strategy. At least one deems the revenue projections unrealistic because Borders no longer has enough stores to generate those sales, said the person, who declined to be identified because Borders’s presentations aren’t public.
Annual sales may drop to $1.5 billion, according to court papers, less than half what the chain generated two years ago. Borders, which is winding down about one-third of its more than 600 stores, has yet to file an outline of its reorganization plan in court.
“As a matter of ongoing company policy, we don’t comment on rumors,” said Mary Davis, a spokeswoman for Ann Arbor, Michigan-based Borders.
The book chain, which once operated more than 1,000 stores, lost business as customers switched to e-readers such as Amazon.com Inc. (AMZN)’s Kindle, introduced in 2007. Larger rival Barnes & Noble Inc. (BKS) invested in its own Nook device to attract customers.
Brothers Tom and Louis Borders founded the company four decades ago, building the chain to almost 20 stores before selling to Kmart Corp. in 1992. Three years later the retailer spun off the business, which had locations under the Borders, Waldenbooks and Planet Music brands.
Jefferies & Co. is a financial adviser to Borders. Josh Passman and Tom Tarrant, spokesman for Jefferies, didn’t return calls for comment.
Borders is seeking to reorganize, raise more capital, or find a buyer for all or parts of the company, according to Bruce Buechler, a lawyer for the unsecured creditors. New York-based Barnes & Noble isn’t viewed as a potential buyer for Borders, according to two people familiar with the process.
The lenders financing the bankruptcy reorganization are led by GE Capital.
This same article link can be found HERE.