SAN FRANCISCO, March 30 Borders Group Inc BGP.N
said on Monday it had extended by one year its $42.5 million
senior secured term loan with Pershing Square Capital Management,
its largest shareholder.
The loan, which includes an interest rate of 9.8 percent, will
be extended from April 15, 2009, until April 1, 2010, the book
seller said in a statement.
Borders also said it would allow its option to sell its U.K.
based Paperchase business to Pershing to expire, and said it was
resetting the strike price on Pershing Square's 14.7 million
warrants to 65 cents per share.
The financing deal with Pershing, signed a year ago, gave the
private equity group 9.55 million warrants to buy Borders stock at
$7.00 per share. Warrants for another 5.15 million shares were
given after the bookseller failed to find a buyer for the company
by a prearranged deadline.
Borders, which is scheduled to report fourth-quarter results
on Tuesday, had twice renegotiated the deadline for repayment of
the $42.5 million loan earlier this year.
After struggling with liquidity issues last year, Borders
ousted its chief executive and brought in as CEO former private
equity executive Ron Marshall, who has experience in turning
around ailing companies.
The No 2 brick-and-mortar book seller, behind Barnes & Noble
Inc (BKS.N), which operates stores under the Borders and
Waldenbooks names, has said it will aggressively cut costs as it
tries to shore up its balance sheet.
Shares of Borders, which are down 89 percent since a year ago,
closed on the New York Stock Exchange at 65 cents.
(Reporting by Alexandria Sage; Editing by Phil Berlowitz)