Borders closes the book on stores

Borders
Group Inc., the number-two U.S. bookstore chain, filed for bankruptcy in New
York after management changes, job cuts and debt restructuring failed to make
up for sagging book sales in the face of competition from Amazon.com Inc. and Wal-Mart Stores Inc.

Borders
will shut about 30 per cent of its “underperforming” stores “in the next several
weeks” and restructure with $505 million in so-called debtor-in-possession
financing from lenders led by GE Capital.

 “It has become increasingly clear that in
light of the environment of curtailed customer spending, our ongoing
discussions with publishers and other vendor related parties, and the company’s
lack of liquidity, Borders Group does not have the capital resources it needs
to be a viable competitor,” said Mike Edwards, Borders Group president.

The
40-year-old chain listed debt of $1.29 billion and assets of $1.28 billion as
of Christmas 2010 in its Chapter 11 petition.

The
company plans to restructure and continue to operate.

“Borders
Group does not have the capital resources it needs to be a viable competitor,”
the company’s president, Mike Edwards, said today in a statement. The filing
will give it “time to reorganize in order to reposition itself to be a successful
business for the long term.”

The
company has 639 stores under the Borders, Waldenbooks, Borders Express and
Borders Outlet names in the U.S. and three in Puerto
Rico.

 The company has 6,100 full-time workers and
11,400 part-time employees, it said.

The
latest planned store closures are subject to bankruptcy court approval.

 The company seeks permission to close as many
as 275 of its stores.