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8-K - FORM 8-K - BORDERS GROUP INC | k50072e8vk.htm |
EX-10.1 - EX-10.1 - BORDERS GROUP INC | k50072exv10w1.htm |
Exhibit 99.1
Borders Group Files for Reorganization Relief Under Chapter 11
Secures Commitment for $505 Million in Debtor-in-Possession Financing
Borders to Continue to Conduct Business in Ordinary Course
Chapter 11 Provides Borders with Best Route to Reorganize and Reposition Company for the Long-Term
Borders to Continue to Conduct Business in Ordinary Course
Chapter 11 Provides Borders with Best Route to Reorganize and Reposition Company for the Long-Term
ANN ARBOR, Mich., Feb. 16, 2011 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 companys 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 companys 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 companys 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 companys 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 companys 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 companys 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 companys 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 companys liquidity or results of operations, (ix) the ability to
execute the companys business and restructuring plan, (x) increased legal costs related to the
companys bankruptcy filing and other litigation, (xi) the companys 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 companys public filings and those
discussed above cause results to differ materially from those expressed in the companys
forward-looking statements, the companys business, financial condition, results of operations or
liquidity, and the interests of creditors, equity holders and other constituents, could be
materially adversely affected.