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Starbucks Unit Objects to Ending Borders Licensing Agreement

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May 26 (Bloomberg) -- Starbucks Corp. unit Seattle’s Best Coffee LLC asked a bankruptcy judge to reject Borders Group Inc.’s request to end the companies’ licensing agreement.

Borders isn’t entitled to cancel the agreement and continue to use Seattle’s Best’s trademarks and products, the coffee company said today in a filing in U.S. Bankruptcy Court in Manhattan. Seattle’s Best also disputed Borders’s claim that terms of the agreement are excessive.

Borders, based in Ann Arbor, Michigan, this month asked for permission to end the licensing agreement, saying that operating its own cafes would reduce the company’s licensing fees, cut costs and boost profit at the sites.

Seattle’s Best had cafes in 225 of Borders’s stores that have closed in bankruptcy, Seattle-based Starbucks said in a regulatory filing for its quarter ended April 3. Seattle’s Best is owed about $5 million in trade debt, according to a summary of Borders’s largest creditors.

Borders, the second-largest book chain after Barnes & Noble Inc., filed for bankruptcy in February. The company reported a loss of $479.9 million for the year ended Jan. 29, on revenue of $1.67 billion.

The case is In re Borders Group Inc., 11-10614, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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