Faced with the need to infuse the company with more cash during the tightest credit crunch in recent memory, Borders Group Inc. today announced it was considering selling all of its business or parts of it.The bookseller also said it had received a $42.5 million secured loan from its largest shareholder, Pershing Square Capital Management, L.P., and a backstop purchase offer up to $125 million to buy some of the company\u2019s international businesses.Bloomberg.com reported today that competior Barnes & Noble said it would consider looking at acquiring Borders.Shares of Borders stock dropped today as the news was announced first by a press release and followed by a late morning conference call to talk about the results for the fiscal fourth quarter and full year, which ended Feb. 2, 2008. Shortly before 12:30 p.m. today, shares of Borders, which trades as BGP on the New York Stock Exchange, had dropped by about 30 percent to $4.96, down $2.14 from the opening. Also today, the company announced that it was suspending its quarterly dividend program to \u201cpreserve capital for operations and strategic initiatives.\u201dBorders said today it had retained J.P. Morgan Securities Inc. and Merrill Lynch & Co. to explore strategic alternatives, including the sale of the whole company and\/or divisions to bolster shareholder value.The company consists of four business segments: Borders Domestic Superstores, Waldenbooks Specialty Retail, International and Borders Superstores outside the United States. As of this month, there are 512 superstores in the United States, as well as 305 Waldenbooks stores, 141 Borders Express stores, 25 Borders airport stores and 14 outlet locations. Overseas, the company runs 22 stores in Australia; five in New Zealand; two in Singapore; three in Puerto Rico and 120 Paperchase stores. It has four superstores in Malaysia operated as a franchise and four in the United Arab Emirates also run by a franchise operator.Borders has been closing underperforming Waldenbooks stores for the past year. In its financial report out today it said it had closed 75 Waldenbooks stores in 2007 and \u201cwill continue to aggressively close Waldenbooks locations that are not achieving targeted returns.\u201dThe company, which announced March 12 that a potential sale of the Australian and New Zealand businesses to A&R Whitcoulls had fallen through, noted today that it was actively pursuing a new deal for them. Ed Wilhelm, Borders CFO, said during today\u2019s conference call that the credit crunch \u201ccertainly had an impact\u201d on that deal going sour. \u201cThere is a lot of interest in that business,\u201d he said, adding that there was one preferred buyer and that if that didn\u2019t work out there were other alternative buyers.CEO George Jones said the lost deal on the Australian and New Zealand properties did play a role in the company\u2019s decision to pursue the financing deal with Pershing Square. \u201cWe needed stability and need to have our vendors and creditors to have confidence that we weren\u2019t\u2019 going to have problems,\u201d Jones noted.Both he and Wilhelm downplayed analysts concerns that the deal seemed to be rushed and urgent. Jones and Wilhem stressed that the Pershing Square funding gives them the flexibility they need to go forward with their strategic plans for the year as well as the strategic alternative process. Jones said they had looked at options with their financial advisors as well as the board of directors before going with the Pershing Square financing commitment. \u201cFrankly, we all felt this was absolutely, clearly the best option we had,\u201d he said.\u201cThe status of the financial markets are extremely challenging and alternatives were limited. Those that were available to us were extremely expensive,\u201d added Wilhem.The officials noted that they have two weeks to seek a better deal than the Pershing Square plan without a break-up fee.<\/p>\n","protected":false},"excerpt":{"rendered":"
Faced with the need to infuse the company with more cash during the tightest credit crunch in recent memory, Borders Group Inc. today announced it was considering selling all of its business or parts of it.The bookseller also said it had received a $42.5 million secured loan from its largest shareholder, Pershing Square Capital Management,…<\/p>\n","protected":false},"author":1314,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37301],"tags":[],"class_list":["post-1003728306","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"yoast_head":"\n