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Borders bankruptcy imminent, report says

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NEW YORK » Borders Group Inc. might file for bankruptcy reorganization as early as Monday or Tuesday, according to a report in the Wall Street Journal.

The No. 2 traditional bookstore in the United States also plans to close about 200 of its 674 stores and cut thousands of jobs, the newspaper reported yesterday, citing sources it did not name.

"There have been constant inquiries by reporters, and stories written, regarding whether Borders is considering a Chapter 11 filing," said Borders spokeswoman Mary Davis. "Borders is not prepared at this time to report on the course of action it will pursue."

(The company’s website lists seven Borders and three Borders Express stores in Hawaii. A Waikele store supervisor said yesterday she did not know whether any Hawaii stores would be closed.)

The Wall Street Journal story also said Borders is hearing pitches from Bank of America Corp. and General Electric Co.’s finance arm for $450 million in financing to keep operating under bankruptcy protection.

GE Capital had no comment. Bank of America could not be immediately reached.

Borders has struggled with losses for years as it tries to adapt to a changing book industry. More people are buying books online, at discounters and other stores.

The company reported sales at its namesake superstores open at least a year were down 14.6 percent for the crucial holiday period this year.

Borders has also been playing catch-up in the rapidly growing e-book market. It entered the electronic book market with Canada’s Kobo Inc. last year, but that announcement seemed belated after chief rival Barnes & Noble announced its own dedicated e-reader, the Nook, in 2009, and invested heavily in a related online store. Amazon.com’s Kindle has dominated the e-reader market.

Borders has cut jobs and closed stores to boost its finances while also shifting its focus from less profitable categories such as music to concentrate more on children’s books, toys, stationery and its cafe.

Borders received a commitment for a $550 million credit line from GE Capital in January. But it said at the time it was still considering an in-court restructuring.

The company received a delisting warning from the New York Stock Exchange last week because its stock has not traded above $1 for 30 consecutive days.

 

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