The Blog of Author Robert K. Lewis

Interesting News On Borders.

This is good news for writers. The more bookstores, chains and/or indies, that keep afloat the better as far as I’m concerned.

From Publishers Lunch:
Borders Lives: Gets $90 Million Term Loan and Extends Smaller $700 Million Credit Facility Into 2014. Fourth Quarter Sales Fall Sharply, But Operating Income Improves
Borders announced after the close of the market today that they have secured a $90 million term loan credit facility from Banc of America Securities (a subsidiary of Bank of America) as “sole arranger”, most of which matures in March 2014. The company “expects” that lenders will “include an affiliate of Stone Tower Capital, funds managed by Tennenbaum Capital Partners, and Gordon Brothers Merchant Partners.” $10 million of that facility will be amortized over September through December of this year. Separately, the company says, it “has met its obligation to Pershing Square” in repaying their $42.5 million loan.

More importantly, Borders has secured longer-term financing by extending an “amended and restated” revolving line of credit that matures in March 2014, at a reduced maximum of $700 million. The existing line of credit would have expired in July 2011. The new financing is a “senior secured asset-based” credit facility, where the previous line was simply “secured by eligible inventory and accounts receivable and related assets.” The previous facility allowed borrowings up to $1,125 million but was effectively smaller because it was “limited to a specified percentage of eligible inventories and accounts receivable.” Borders should disclose more details of the new financing when the file formal statements with the SEC.
Company release

With new financing in place, Borders also reported fourth quarter and full-year earnings. The company made $59.9 million (91 cents a share) from continuing operations in the final quarter, much improved from $28.9 million (48 cents a share) a year ago, though adjusted EBITDA fell from $132.6 million to $91.3 million. Their debt net of cash at the end of the quarter was $245 million, a $37.6 million reduction from a year ago.

Comp-store sales were about as horrible as their holiday report indicated, down 14 percent in the Borders superstores, also declining 14.4 percent for the full year. Fourth quarter sales of $937 million were down 13.3 percent overall.

For the full year, superstores sales of $2.3 billion were down 13.7 percent, and Waldenbooks sales of $387 million fell 19.3 percent, due to the closure of 212 stores during the year. They finished the year with 508 Borders superstores and 175 Walden specialty stores. The full-year loss from continuing operations was $110.2 million, better than the 2008 loss of $184.7 million in 2008, but adjusted EBITDA of $67 million was down from last year’s $107.7 million.

Interim ceo Mike Edwards says in the announcement, “Restoring the financial health and profitability of the company remains our top priority. We took important steps toward this goal with the long-term extension of our existing credit facility and the additional capital provided by the new term loan. We have made significant operational and financial improvements and will maintain those disciplines as we shift our focus now to growing market share by acquiring, engaging and retaining customers through a transformation of the Borders brand. I’m pleased with the cooperation we have received from our bank group, lenders, vendors, partners and associates who share our vision for a successful Borders.”
Results

2 responses

  1. I agree – anything about keeping book stores open is very good news indeed! Online shopping can’t replace the joy of browsing in my favourite bookstore. 🙂

    04/01/2010 at 11:17 am

  2. Yeah, I feel the same way. It’s tough, because it’s these large chains that have helped contribute to the demise of indie bookstores (along with Amazon, natch), however, I would hate to see these brick and mortar stores go the way of the dinosaur, that’s for sure.

    04/01/2010 at 5:15 pm

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