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BORDERS

(Steve Carmody/Michigan Radio)

Borders Books is expected to begin its next chapter this week. The Ann Arbor based bookseller is expected to file for bankruptcy protection Monday or Tuesday. 

On Friday, the Wall Street Journal reported Borders will likely file for bankruptcy protection this week. Borders stock fell by a third on the news.

It’s not like the news was unexpected. Borders has been struggling financially for years. Less than a year ago,  investors were paying more than $3 for a share of Borders stock. When the market closed Friday, you could have bought a share of Borders Books for 25 cents.

Borders is still the nation’s number 2 traditional bookstore with more than 600 stores. But as book buyers have spent more online, Borders’ share of the total book market has shrunk.

It’s been delaying payments to publishers and others since December, as the company has tried to hang on to some cash. Borders’ bankruptcy plan reportedly includes closing more than 200 stores. 

No word on what the plan is to convince book buyers to return to Borders.

The Rise and Fall (and Re-Rise?) of Borders Group.

The Wall Street Journal is reporting that Borders Group may file for bankruptcy protection on Monday or Tuesday next week. The Ann Arbor-based bookseller has struggled in recent years as book buyers have migrated from big box stores to the web.

Ruthanne Reid / Flickr

This could be a pivotal week for the future of Borders Books with some sources saying the company could seek bankruptcy protection.    

The Ann Arbor-based bookseller delayed payments to publishers and others the past two months.   The company has been trying to negotiate with its vendors and come up with a plan to move forward.    Borders has a half billion dollar financing deal in place, if it can come to terms with its vendors. 

Jeff Manning is a managing director with BDO Capitol Advisors.   Manning’s company closely follows the retail market. 

"The challenge,  if you look at the statistics,  majority of companies that enter bankruptcy do not emerge.  If you look at recent statistics with retailers, an awful lot of retailers have gone straight into liquidation." 

Manning expects Borders’ vendors will decide it’s more in their interest to keep Borders viable. He says, if Borders does file for bankruptcy, the company will probably exit bankruptcy before Christmas.   But Manning says Borders execs must be careful, since the bookseller is in a precarious position:

"One foot in the grave and one foot on a banana peel," says Manning.

 

The Rise and Fall (and Re-Rise?) of Borders Group.

Ann Arbor-based Borders Books announced Sunday that it would be delaying January payments to its landlords, vendors and others. Borders also delayed payments in December.  

Borders says the move is intended to ‘protect liquidity’. Borders has been losing money for years, as book buyers have increasingly turned to the internet.

Michael Norris is the senior trade book analyst with Simba Information. He says there is one problem Borders executives must find a solution for. 

They need to answer the question 'Why should I shop at Borders? They should tattoo that question backward on their forehead so they can see every time they look into the mirror every morning.

Borders lined up a half billion dollars in financing last week to help the book seller stay afloat. But the company may still be headed toward bankruptcy protection

Ann Arbor-based Borders Books may be able to stave off bankruptcy, thanks to a new financing deal announced this week .     Professional writers are waiting to see what the company’s next chapter will bring. 

Courtesy Creative Commons

Borders Books has been struggling to survive. 

Yesterday, the Ann Arbor bookseller announced it had lined up $550 million dollars in financing to stay afloat.

The deal is contingent on Borders reaching a deal with book publishers. It's been reported that the company set a February 1st deadline for the publishers to agree to take up to a third of the booksellers debt. A Borders spokeswoman would only say the company has not stated a specific date. 

The deal with GE Capital announced Thursday could help. Or it may not. The Wall Street Journal is reporting that Borders is still looking for money to finance the company through a possible bankruptcy filing.

Flickr - Ruthanne Reid

The headlines for the Michigan-based Borders Group Inc. have not been good lately:

And my personal favorite speculative headline:

It seems everyone has been on a death watch for the bookseller.

Today, Julie Bosman writes in the New York Times Borders may be close to a financing deal that might help the company reorganize. From the article:

Borders executives told publishers that they were close to securing refinancing from GE Capital and other lenders, these people said, speaking only on condition of anonymity, and that the company intended to reduce costs, improve liquidity and expand marketing efforts, as well as sell some assets.

Earlier this month, we  posted on a Reuters report that said Borders was working with publishers to work out a deal. Borders is in debt to the publishers for past shipments and the company reportedly wants to restructure that debt as a loan.

Meanwhile, the company is cutting costs. The Detroit News reported yesterday that Borders is closing a big distribution center in Tennessee:

Borders will consolidate the processing and delivery of books, movies, music and other products to two distribution centers in Carlisle, Pa., and Mira Loma, Calif. It is part of a long-term effort to cut costs and make the distribution of products to bookstores more efficient, Borders Group said in a statement.

So will borders survive? What would your future headline say?

flickr - brewbooks

Sales at Borders Book stores have been slipping for several years as more buyers go to places like Amazon.com to find their titles, and as more people move into the digital reader market. Last month, the company reported that its third quarter sales were down 17.6% from the same period a year ago.

So the company is struggling to find a way to pay its bills. One way it's trying to preserve cash is to suspend its payments to publishers.

(courtesy of Borders Group/photo credit: Laszlo Regos)

Borders Books reported the company lost $74 million dollars in the 3rd quarter. That's about twice as much as Borders lost in the 3rd quarter of 2009. The Ann Arbor based book seller continues to struggle in a competitive market.

In a written statement, Borders Group CEO Mike Edwards conceded his company's struggles:

Ildar Sagdejev / creative commons

Update: 2:12pm:

Since we posted this story we found this analysis piece by Sarah Weinman of Daily Finance News. She also calls the notion that Borders Books could buy Barnes & Noble a story that has "entertainment value" not much more. Weinman says of Borders Books:

"If a merger was its plan for saving itself, expect B&N's rejection of the deal to accelerate its downward spiral -- an end that, sadly for the publishing industry, is likely to come sooner rather than later."

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