Borders Advances on Report Jefferies to Aid in Book Chain's Restructuring
Borders Group Inc., the second- largest U.S. bookstore chain, surged in after-hours trading on a report that Jefferies & Co. is helping the company restructure its debt.
The investment bank is advising the Ann Arbor, Michigan- based chain on reworking its debt load, the Wall Street Journal reported today, citing people familiar with the matter. Borders doesn’t have plans to hire bankruptcy lawyers at this time, the paper said.
Mary Davis, a spokeswoman for Borders, didn’t immediately return a phone call seeking comment.
Borders advanced 14 cents to $1 at 5:35 p.m. in extended trading. The shares closed at 86 cents at 4:15 p.m. today in New York Stock Exchange composite trading.
Borders, which hasn’t posted an annual profit since 2006, is trying to improve liquidity after fiscal third-quarter sales missed expectations and lenders cut its borrowing capacity, having downgrading the value of its inventory, the company said last month. The retailer has said it’s trying to refinance debt, restructure vendor agreements and cut costs.
There is no guarantee Borders will be successful in refinancing its debt or vendor agreements, Davis said Jan. 4. Failure may cause Borders to violate credit agreements and experience a “liquidity shortfall” in the first quarter, she said.
As part of its plan to restructure financing agreements with vendors, Borders said last week it delayed payments to some publishers. Executives including President Michael Edwards are in New York this week to meet with publishers.
To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net.
To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net.
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