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Friday, December 31, 2010 8:32:34 PM
BGP - GET READY!
Shares of Borders Group Inc. (BGP) fell 22% Friday after the nation's second-largest bookseller said it was postponing payment to some publishers and warned it faces a severe cash crunch in early 2011.
"Borders has determined that it is necessary to restructure its vendor financing arrangements and is delaying payments to certain of its vendors. Borders has notified these vendors and will be working with them to restructure their arrangements," spokeswoman Mary Davis said, reading from a prepared statement.
Davis warned that failing to secure refinancing "could cause the company to violate the terms of its existing credit agreements in the first calendar quarter of 2011 and the company could experience a liquidity shortfall." She declined to comment further.
Borders shares were last down 26 cents, at 90 cents. The last time the stock dipped below $1 dollar a share was in early February.
It has been a wild ride this year for Borders' shareholders, with the stock swinging between a low of 85 cents in January and a 52-week high of $3.29 in early April. As it stands, the stock is set to exit the year 24% below where it began it.
The Ann Arbor, Mich., company made it clear earlier this month that it was in financial straits and needed to refinance its debt.
The company has been struggling with weaker sales for months, a trend that has accelerated as customers increasingly turn to the Internet to buy books and music.
On Dec. 9, Borders reported third-quarter sales fell nearly 18% to $470.9 million from a year earlier, with same-store sales down 12.6%. The results were a third-quarter loss of $74 million, or $1.03 a share, from ongoing operations.
The weak economy has also taken a toll on book purchases in general, with companies such as Barnes and Noble Inc. (BKS) also down about 25% this year. Barnes & Noble, the bigger of the two by sales, is currently looking for someone to buy the company.
Troubles facing the two companies have led some to suggest that their chances of survival might be better if they joined forces, a possibility both companies' top executives have at least considered.
Investor Bill Ackman, who has a 37% stake in the company through Pershing Square Capital Management, said earlier this month he would back a cash-merger deal, proposing that Borders buy Barnes & Noble for $16 a share.
-By Jim Jelter, 415-439-6400; AskNewswires@dowjones.com
Shares of Borders Group Inc. (BGP) fell 22% Friday after the nation's second-largest bookseller said it was postponing payment to some publishers and warned it faces a severe cash crunch in early 2011.
"Borders has determined that it is necessary to restructure its vendor financing arrangements and is delaying payments to certain of its vendors. Borders has notified these vendors and will be working with them to restructure their arrangements," spokeswoman Mary Davis said, reading from a prepared statement.
Davis warned that failing to secure refinancing "could cause the company to violate the terms of its existing credit agreements in the first calendar quarter of 2011 and the company could experience a liquidity shortfall." She declined to comment further.
Borders shares were last down 26 cents, at 90 cents. The last time the stock dipped below $1 dollar a share was in early February.
It has been a wild ride this year for Borders' shareholders, with the stock swinging between a low of 85 cents in January and a 52-week high of $3.29 in early April. As it stands, the stock is set to exit the year 24% below where it began it.
The Ann Arbor, Mich., company made it clear earlier this month that it was in financial straits and needed to refinance its debt.
The company has been struggling with weaker sales for months, a trend that has accelerated as customers increasingly turn to the Internet to buy books and music.
On Dec. 9, Borders reported third-quarter sales fell nearly 18% to $470.9 million from a year earlier, with same-store sales down 12.6%. The results were a third-quarter loss of $74 million, or $1.03 a share, from ongoing operations.
The weak economy has also taken a toll on book purchases in general, with companies such as Barnes and Noble Inc. (BKS) also down about 25% this year. Barnes & Noble, the bigger of the two by sales, is currently looking for someone to buy the company.
Troubles facing the two companies have led some to suggest that their chances of survival might be better if they joined forces, a possibility both companies' top executives have at least considered.
Investor Bill Ackman, who has a 37% stake in the company through Pershing Square Capital Management, said earlier this month he would back a cash-merger deal, proposing that Borders buy Barnes & Noble for $16 a share.
-By Jim Jelter, 415-439-6400; AskNewswires@dowjones.com
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