BANGALORE/NEW YORK Nebraska Book Co, one of the largest college bookstore operators, filed for bankruptcy protection to restructure its debt after seeing sales drop and losses mount as more customers shop online.
The prearranged Chapter 11 filing by the nearly century-old company and seven affiliates follows a similar filing in February by Borders Group Inc, the nation's second-largest bookstore chain.
Both companies cited too much debt and falling sales in brick-and-mortar stores in their filings.
Nebraska Book had $657.2 million of assets and $564 million of debts as of February 14, according to a petition filed on Monday with the U.S. bankruptcy court in Delaware.
The Lincoln, Nebraska-based company said it operates about 280 bookstores on or near college campuses, and is a large wholesaler of textbooks. Its main rivals include Barnes & Noble Inc and Follett Higher Education Group Inc.
In a court filing, Chief Financial Officer Alan Siemek said several years of declining or stagnant earnings left Nebraska Book unable to refinance debt maturing in 2011 and 2012.
"The relative decline of (the debtors') off-campus stores' performance is due to a combination of on-line textbook sales and, more recently, online rental programs, which have been successful in attracting 'value shoppers,' the debtors' primary customers in the off-campus stores," Siemek wrote.
Nebraska Book said most holders of two debt issues agreed on a restructuring for $450 million of its loans and bonds, eliminating up to $77 million of debt at the parent level.
It also said it has lined up $200 million of financing to keep operating in bankruptcy. Nebraska Book said it lost $98 million in its latest fiscal year, mainly because of a goodwill writedown, on revenue of $598 million.
The restructuring requires court approval.
Nebraska Book was founded in 1915 with a single bookstore near the University of Nebraska campus.
The case is In re: Nebraska Book Co et al, U.S. Bankruptcy Court, District of Delaware, No. 11-12005.
(Reporting by Santosh Nadgir and Jonathan Stempel; Editing by Hans-Juergen Peters and Robert MacMillan)