Why is Borders getting more financing??? Up to $500,000,000!!!!!!

Discussion in 'Wall St. News' started by S2007S, Jan 15, 2011.

  1. S2007S


    Came across this news and I am completely baffled as to why Borders is going to get more financing? Why anyone would think this company can sustain its business model going out another 1, 2 or even 3 years is beyond me. Talk of $500 million in new capital and maybe even more is being talked about, they can try and rearrange every business they have. These bookstores will be closing sooner than later as everything goes to digital format, in the next 5 years or so. This is just unbelievable!!!

    Borders shares rise on report financing is near
    Borders shares spike 12 percent on report it is close to securing financing to stay afloat

    On Friday January 14, 2011, 11:42 am EST

    NEW YORK (AP) -- Shares of Borders Group Inc. jumped 12 percent Thursday on a news report that the troubled bookseller is close to securing financing it needs to stay afloat.

    The New York Times reported late Thursday, citing sources it did not name, that Borders executives told publishers they were close to securing refinancing from GE Capital and other lenders.

    The bookseller has struggled for several years and said last month it had delayed payments to some vendors to preserve cash while it tries to refinance its debt. Earlier this week Borders said it will close one of its three distribution centers in mid-July and eliminate the 310 jobs.

    Borders spokeswoman Mary Davis said the company does not comment on outside reports on the company.

    "As we have said, we are working with lenders on refinancing and, as part of this, are in discussions with certain vendors," she said.

    GE Capital did not respond to a request for comment.

    S&P retail analyst Michael Souers upgraded his opinion on the company to "Hold" from "Sell" based on the report.

    "While we expect the terms of a possible refinancing as onerous, and maintain that the company's battle for long-term survival remains an arduous uphill climb, refinancing would provide the company with much-needed time to strategize," Souers wrote.

    Borders shares rose 12 cents, or 14.3 percent, to 93 cents in midday trading. The stock has traded between 78 cents and $3.29 during the past 52 weeks.
  2. TGregg


    `Cuz it's a risk free game. Heads and the bankers win, tails and the taxpayers lose.
  3. Too bad Borders couldn't get in on the college text book racket.

    I used to ask at the BN and Borders stores, where are the "over $100 books"? I just wanted to see what a hundred dollar book looks like. Hard pressed to find a book selling over a hundred bucks there.
  4. No kidding about that. What kind of numbers are we talking about nowadays for a semester's worth of textbooks? In addition to the $40,000+ for tuition, room & board, etc...

    I'll never be able to wrap my head around this idea that college at a private university can cost $200,000. Gimme a f'n break.
  5. Pekelo


    Only idiots buy college books at the university. I was able to cut the books' cost by 75% because I bought the books online...

    A $160 Chemistry textbook came from Indonesia by Fedex for $41, what is both amazing and a shame...

    Due to ereaders, BN's business strategy is dying. Magazines don't sell either...
  6. S2007S


    UPDATE 2-Borders may file for bankruptcy this month-source

    12:00am EST

    Tue Feb 1, 2011 6:26pm EST

    * Borders may file for bankruptcy this month-source

    * Borders plans to close 150 stores, according to report

    WILMINGTON, Del. Feb 1 (Reuters) - Borders Group Inc (BGP.N), the second-largest U.S. book chain, may file for bankruptcy later this month, a source familiar with matter said.

    The struggling chain, which operates, 500 stores, will likely close at least 150 stores, according to a separate report by Bloomberg News.

    Several private equity investors are considering whether to provide a junior loan to the company, according to the report.

    Bloomberg cited unidentified sources for its story.

    Borders said on Sunday it would seek to preserve cash by delaying its January payments to vendors and landlords as it tries to complete a debt restructuring. [ID:nN30160364]

    Borders last week secured a $550 million credit facility from GE Capital, a unit of General Electric Co (GE.N), under several conditions, including that it close stores and arrange financings with other lenders, vendors and landlords.

    It also warned it might have to file for Chapter 11 bankruptcy if it failed to meet those conditions.

    Analysts have faulted Borders for being ill equipped to adapt to bookbuyers' migration to digital formats and for having too many stores in an age when many shoppers prefer to buy even paper books on line from retailers like Amazon.com Inc (AMZN.O)

    The chain operates 500 namesake superstores in addition to the smaller Waldenbooks chain. About three-quarter of its superstore leases expire in 2017 and beyond, according to a regulatory filing.

    Borders is late comer to the ebooks market, a rare source of growth in the publishing world, launching its ebook store eight months after its larger rival, Barnes & Noble Inc (BKS.N), and nearly three years after Amazon.com.

    Sales at stores open at least a year have plunged in recent years, with overall company sales down 37.3 percent in the last three years.

    Borders did not immediately return several calls for comment.

    Its shares fell 35.6 pct to 47 cents in regular trading on the New York Stock Exchange on Tuesday.

    After hours, shares fell further to 38 cents. They hit an all time low of 35 cents in in December 2008.
  7. 1) Oh God! Students will have to study at home or a public library instead.
    2) They could have trading terminals set-up in the stores as an additional source of revenue.
    3) The shares could become more active than "C". :cool:
  8. Just so you know...bookstores generally get 55 cents out of every dollar for each book sold. That is a pretty high profit margin. Not to mention that generally the bookstores have the right to send the books back after so many months if the book is not selling.

    For comparison sake, Walmart gets about 26 cents out of every dollar for each item sold.

    Borders problem is not that they have a bad business model, but the fact that they have huge competition from Amazon which can undercut them in price two ways. First way is through new books because Amazon wants the publisher to give up 65% of the retail price per dollar, so they can discount right away, and the fact that people sell their used books for cheaper than it cost to print the books.

    Borders only advantage over amazon is that anyone that doesnt have a computer has to go to a physical location. Last time i was there, they had a decent amount of customers though. I think if they had smaller stores they might make a bit more of a profit. Stock less books and just order more often.
  9. I disagree I actually think the true advantage is they are at a physical location and can fulfill the "I want it now" need. Many times I've wanted a book and went to borders to buy it at a higher price than amazon so I could get it now versus 4 days from amazon. The true downfall was they never carried enough inventory why would I order a book from borders online when I can do it myself.
  10. exactly how often do you need a book right away? Use Amazon Prime(free), you'll get it next day pretty much......good deal eh?
    #10     Feb 2, 2011