ANN ARBOR, Mich., Feb.
16, 2011 /PRNewswire-FirstCall/ --
"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 and which are
essential for it to move forward with its business strategy to
reposition itself successfully for the long term. To position
Borders to remedy this condition, Borders Group, with the
authorization of its board of directors, has filed a petition for
reorganization relief under Chapter 11 of the Bankruptcy Code. This
decisive action will give Borders the opportunity to achieve a
proper infusion of capital in order to have the opportunity to have
the time to reorganize in order to reposition itself to be a
successful business for the long term," said Mike Edwards, Borders Group President.
"In this regard, operating under Chapter 11, Borders has
received commitments for $505 million
in Debtor-in-Possession (DIP) financing led by GE Capital,
Restructuring Finance. This financing should enable Borders to meet
its obligations going forward so that our stores continue to be
competitive for customers in terms of goods, services and the
shopping experience. It also affords Borders the opportunity to
move forward in implementing the appropriate business strategy
designed to reposition Borders to be a potentially vibrant,
national retailer of books and other products," Mr. Edwards
emphasized.
The company said that it is serving customers in the normal
course, including honoring its Borders Rewards program, gift cards
and other customer programs. Additionally, the company expects to
make employee payroll and continue its benefits programs for its
employees.
Borders said that it has many strengths upon which to build a
solid plan of reorganization and implement a new business model for
Borders to address the changing needs of the American reader. "For
decades, Borders has been a beacon of engagement – a highly
frequented destination for consumers and a significant venue for
authors and vendors to showcase new books and merchandise. We have
the ability, based on our brick and mortar presence nationally; the
on-line capabilities we have in place; the loyalty of, and access
to, our customers; and the products and services we offer to be an
important and easy access destination of exploration and purchase
for readers across the country," commented Mr. Edwards.
The company noted that, among other initiatives and subject to
court approval, Borders plans to undertake a strategic Store
Reduction Program to facilitate reorganization and its
repositioning. Borders has identified certain underperforming
stores — equivalent to approximately 30 percent of the company's
national store network — that are expected to close in the next
several weeks. At the same time, the company noted that a major
strength of Borders is its national presence, and its extensive
network of remaining stores as well as Borders.com, will continue
to run in normal course. The company emphasized that the closings
were a reflection of economic conditions, cost structures and
viability of locations, among other factors, and not on the
dedication and productivity of the workforce in these stores.
"We are confident that, with the protection afforded under
Chapter 11 and with the support of employees, publishers, suppliers
and creditors, and the reading public, a successful reorganization
can be achieved enabling Borders to emerge from the process as a
stronger and more vibrant book seller," concluded Mr. Edwards.
"We are very pleased to be able to make this commitment to
Borders as support for their plan to re-organize the company," said
Tim Tobin, Managing Director, Retail
Restructuring, GE Capital, Restructuring Finance.
The Chapter 11 petition for relief was filed in the U.S.
Bankruptcy Court, Southern District of New York. Completion of the company's
DIP financing arrangements is subject to approval of the Bankruptcy
Court and the satisfaction of certain conditions provided in the
financing commitments received by the company from the lenders
providing such financing.
Additional information about the reorganization is available at
www.bordersreorganization.com or by telephone at (877)
906-7675.
About Borders Group, Inc.
Headquartered in Ann Arbor,
Mich., Borders Group, Inc. (NYSE: BGP) is a leading
specialty retailer of books as well as other educational and
entertainment items. Online shopping is offered through
borders.com. Find author interviews and vibrant discussions of the
products we and our customers are passionate about online at
facebook.com/borders, twitter.com/borders and
youtube.com/bordersmedia. For more information about the company,
visit borders.com/media.
Safe Harbor Statement
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
One can identify these forward-looking statements by the use of
words such as "expect," "believe," "planning," "possibility,"
"opportunity," "goal," "will," "may," "intend," "anticipates,"
"working toward" and other words of similar meaning. One can also
identify them by the fact that they do not relate strictly to
historical or current facts. These statements are subject to risks
and uncertainties that could cause actual results and plans to
differ materially from those included in the company's
forward-looking statements.
These risks and uncertainties include but are not limited to
(i) the ability of the company to continue as a going concern,
(ii) the company's ability to obtain Bankruptcy Court approval
with respect to motions in the Chapter 11 cases, (iii) the
ability of the company and its subsidiaries to prosecute, develop
and consummate one or more plans of reorganization with respect to
the Chapter 11 cases, (iv) the effects of the company's
bankruptcy filing on the company and the interests of various
creditors, equity holders and other constituents,
(v) Bankruptcy Court rulings in the Chapter 11 cases and the
outcome of the cases in general, (vi) the length of time the
company will operate under the Chapter 11 cases, (vii) risks
associated with third party motions in the Chapter 11 cases, which
may interfere with the company's ability to develop and consummate
one or more plans of reorganization once such plans are developed,
(viii) the potential adverse effects of the
Chapter 11 proceedings on
the company's liquidity or results of
operations, (ix) the ability to execute the company's
business and restructuring plan, (x) increased legal costs
related to the company's bankruptcy filing and other litigation,
(xi) the company's ability to maintain contracts that are
critical to its operation, to obtain and maintain normal terms with
its vendors, landlords and service providers and to retain key
executives, managers and employees. In the event that the
risks disclosed in the company's public filings and those discussed
above cause results to differ materially from those expressed in
the company's forward-looking statements, the company's business,
financial condition, results of operations or liquidity, and the
interests of creditors, equity holders and other constituents,
could be materially adversely affected.
(Logo: http://photos.prnewswire.com/prnh/20060208/BORDERSGRPLOGO
)
SOURCE Borders Group, Inc.