WILMINGTON, Delaware Ailing book chain Borders Group Inc BGP.N is seeking a $450 million loan to keep its shelves stocked during an imminent Chapter 11 bankruptcy, Reuters Loan Pricing Corp reported on Tuesday.
GE Capital Corp is preparing the financing, known as a debtor-in-possession or DIP loan, RLPC said, citing sources.
In January, Borders had said that GE Capital had agreed to provide a $550 million credit facility as long as certain conditions were met, including closing stores and arranging financings with other lenders, suppliers and landlords.
Borders said at the time of announcing the GE Capital commitment that alternatives to that financing could include a bankruptcy filing.
The company is expected to file for Chapter 11 by the end of the month, sources have told Reuters.
GE Capital is trying to syndicate the loan, and RLPC reported that efforts to find investors for the loan are moving slowly.
The loan includes a $410 million revolving credit, a $20 million term loan and $20 million in letters of credit, RLPC reported, citing sources.
Borders and GE Capital did not immediately return a call for comment.
Borders is also considering bids from liquidators who were asked for their proposals to close around 200 U.S. locations, including both Borders superstores and smaller Waldenbooks shops, sources told Reuters on Monday.
Borders has suffered from years of intensifying competition from Internet retailers such as Amazon.com Inc (AMZN.O) and discount retailers such as Costco Wholesale Corp (COST.O), which offer cut-rate prices on bestsellers.
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).
(Reporting by Tom Hals, with additional reporting by Leela Parker and Caleb Frazier in New York; Editing by Tim Dobbyn)