Borders Credit Put Option – AR Put – Receivables Put – Bankruptcy Protection
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Borders ‘just trying to stay alive,’ analyst says
The holiday shopping season may determine whether financiers are willing to help Borders Group Inc. get the credit it needs to survive without turning to court-based restructuring, a retail industry analyst told Reuters.
With just over a week until Christmas, Borders needs every shopper it can find. The Ann Arbor-based book store chain said last week that it may face liquidity problems in the first quarter of 2011, a crisis that could threaten its ability to conduct its day-to-day business.
“They’re just trying to stay alive at this point,” Standard & Poor’s analyst Michael Souers told Reuters. “Hopefully, their numbers can improve enough to get someone to want to lend them more money.”
One of Borders’ top shareholders, New York hedge fund manager Bill Ackman’s Pershing Square Capital Management, has said he’s willing to help Borders finance an acquisition of rival Barnes & Noble in an effort to consolidate costs and achieve profitability.
Borders employs about 600 people at its Ann Arbor headquarters.
But another analyst suggested that solution doesn’t make sense because Barnes & Noble could swoop in and snatch the most valuable remains of Borders if the Ann Arbor company has to file for bankruptcy.
“If one wanted to go after the other’s real estate, they could just wait until bankruptcy and pick them off on the cheap,” Morningstar analyst Pete Wahlstrom told Reuters.
Borders employs about 600 workers at its Ann Arbor headquarters and more than 19,000 at about 600 stores.
Reporting its third-quarter sales last week, the firm recorded a third-quarter net loss of $74.4 million, doubling its loss from the same period in 2009. Borders said that its revenue declined 17.6 percent to $470.9 million and that sales at stores open at least a year dropped 12.6 percent, reflecting a continuous revenue slide.
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