Borders delays payments to vendors


NEW YORK: Borders Group Inc. has delayed payments to some of its vendors as the nation's second-largest bookseller seeks to preserve cash while it struggles to refinance its debt. The news sent shares down more than 15 percent in after-hours trading.

The amount that Borders can borrow under its credit facility has been reduced because the value of its inventory has fallen. Borders spokeswoman Mary Davis said Thursday that the company will work with vendors to restructure their payment arrangements while it continues to try to refinance its senior credit facilities.

Borders has said that it is in talks with other possible lenders to replace its financing and that it may sell some assets to improve its cash position. It plans to close 16 stores during the fourth quarter, including four by ending leases early and the rest when their leases run out. But Ann Arbor, Michigan-based Borders reiterated Thursday that there is no assurance that any refinancing will come through, and that it could violate terms of its debt in the first quarter of 2011 and "experience a liquidity shortfall."

Borders Group Inc. earlier this month reported a wider third-quarter loss and a steep drop in sales just a few days after activist investor William Ackman offered to finance a Borders bid for its much larger rival, Barnes & Noble Inc.

Borders has been reporting losses for years, but its results worsened in recent quarters with heightened competition from Barnes & Noble and larger merchants including Amazon.com Inc., Wal-Mart Stores Inc. and Target Corp.

The growing electronic book market is another challenge, although Borders has jumped into that realm, launching its e-bookstore over the summer and adding services to its website during the third quarter. - AP

Latest business news from AP-Wire

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights
   

Next In Business News

UK reveals US$13.3b of inward investment in green push
Bitcoin pushes toward record before debut of futures-based ETF
Hong Kong's new China futures create bourse history, but lag rival Singapore
Chinese property bonds firm after Kaisa and Sunac make coupon payments
CIDB hopes for funds to boost tech in construction
IOI Corp offers to buy debt notes
Indonesia’s higher coal output target thwarted by heavy rains
H&R to invest RM200mil in speciality manufacturing plant in Lumut
AirAsia X proposes to pay 0.5% of RM34bil debt owed to creditors
Haily bags RM25mil project

Others Also Read


Vouchers