Borders To Get $550 Million Refinancing From GE Under Certain Conditions (BGP)

Borders could get a $550 million senior secured credit facility from GE Capital, Restructuring Finance if they meet certain conditions. The stock was up 34% at $1.08 in after hours trading. Publishers have by February 1, 2011 to "exchange missed payments for notes" (1 2 PublishersWeekly).
"ANN ARBOR, Mich., Jan. 27, 2011 /PRNewswire via COMTEX/ -- Borders Group, Inc. (NYSE: BGP) today announced that it has received a commitment from GE Capital, Restructuring Finance to provide a $550 million senior secured credit facility that, upon completion, including the obtaining of $125 million of additional junior debt financing via the conversion of vendor payables and/or external sources, will provide Borders with the financial flexibility and an appropriate level of liquidity to move forward with its strategy to reposition its business model and the Borders brand. GE Capital provided its financing commitment following a comprehensive review of the company's strategic plan to restructure its business model by focusing on core business areas in order to improve profitability and cash flow".

"The new $550 million senior secured credit facility, once funded, will mature in 2014, and will replace the company's existing revolving senior credit and term loan facilities.

The commitment provided by GE Capital is subject to certain conditions, including:

  • The successful syndication of $175 million of the senior credit facility with other lenders, which GE Capital and the company are both working to secure; 
  • $125 million of junior debt financing provided by certain vendors and other lenders; 
  • The completion of supporting financing arrangements with the company's vendors, landlords and other financing parties on terms satisfactory to GE Capital; 
  • Borders' finalization of a store closure program comprising the identification of underperforming stores that will be closed as soon as practicable; 
  • GE's completion of its business, financial and legal due diligence; the negotiation and execution of definitive financing documents; the absence of any material adverse change in the company's business or financial condition; and other customary conditions. "

President of Borders Group, Mike Edwards, said there's still the possibility of an "in-court" restructuring.
"Borders is doing everything possible to maintain its long-term and valued relationships with our vendors and publishers, which are in the best interests of serving our combined customers. We view the refinancing route as the most practical, efficient and beneficial to all parties, and we are working with our vendors in this regard. At the same time, given the current environment surrounding Borders, and in order to assure that the company can pursue its efforts to position itself to properly implement its business plan, it is prudent as well for Borders to explore alternative avenues, including the possibility of an in-court restructuring. We are confident that whatever path Borders pursues to implement its strategy, we will be able to count upon the support of our vendors, who understand the critical role a strong Borders provides to the reading public," commented Mr. Edwards."

Full press release:

Previous Posts:

$BGP February Call Option Activity, Watching Borders Group News (January 10, 2011)

Borders' General Counsel, CIO Resigned, Delayed Vendor Payments, Will It Merge With Barnes And Noble? (BGP, BKS) (January 4, 2011)

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