Borders eyes store closingsa and liquidations: sources
WILMINGTON, Del./NEW YORK |
WILMINGTON, Del./NEW YORK (Reuters) - Bookseller Borders Group Inc BGP.N is reviewing bids from liquidators to close hundreds of stores as it works out the final details of its impending bankruptcy filing, according to people close to the talks.
The review is part of its plan to close about 200 of its 650 stores, which are a mix of Borders superstores and smaller Waldenbooks shops, these people said.
The store closings will remove weak stores that have bled the retail chain's cash in recent years and provide immediate funds from the sale of inventory.
"Borders will not comment or speculate upon Borders' future course," said a company spokesman. "If and when the company has something to disclose, it will do so."
One sticking point for the liquidators is that publishers want a say in the price of books in store closing sales.
The liquidators bidding for the business include Tiger Capital Group, SB Capital Group, Gordon Brothers Group and Great American Group, according to a person close to the bidding.
The liquidators did not return calls for comment.
Gordon Brothers and Great American both were involved in a $90 million term loan arranged for Borders early last year.
While the number of Borders superstores has remained almost level at just more than 500 locations in the last three years, the Waldenbooks chain has fallen from 490 locations in 2007 and was down to 168, as of October 31.
Borders is also negotiating with publishers to work out the terms under which they will continue to supply books after it files for bankruptcy, according to sources.
The talks with publishers center around an agreement to pay some of the money currently owed to publishers in return for agreements to extend a similar amount of credit to the book chain in bankruptcy. While such an agreement might not put any money in the publishers' pockets, it could move some of the credit closer to the front of the line for repayment in the bankruptcy, sources said.
Better credit terms with the publishers could reduce the company's need to borrow under a debtor-in-possession loan, which is a loan made to a bankrupt company to keep its business operating while it tries to pull off its turnaround.
The company owes tens of millions of dollars to six major publishers for books that were shipped last year, sources said. Some publishers have stopped shipping to the company.
In addition, the publishers want some form of collateral for the credit they supply once the company is in bankruptcy.
Borders has suffered from years of intensifying competition from Internet retailers such as Amazon.com Inc (AMZN.O) and discounter retailers such as Costco Wholesale Corp (COST.O), which offer cut-rate prices on best-sellers.
The company that helped pioneer book superstores that stock more than 100,000 titles was also much slower to respond to the growing popularity of e-readers such as Nook, which helped boost holiday sales at the largest U.S. bookstore chain, Barnes & Noble Inc (BKS.N).
(Additional reporting by Phil Wahba in New York; Editing by Gary Hill)
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