Monday, January 17, 2011

Borders Watch: Yeah, it's bleak.

Things aren't looking good for my favorite mega-chain, Borders...

First the news, then my thoughts. I read this on Robot 6, and it is presented verbatim below:

"The Borders death watch continues, with the struggling bookstore chain giving publishers until Feb. 1 to accept or reject a proposal to convert delayed payments into loans. Publishers reportedly are skeptical of the plan, which would see them take up one-third to one-quarter of the bookseller’s reorganized debt. The Ann Arbor, Mich.-based retailer also has hired bankruptcy and restructuring lawyers to advise in its restructuring efforts, which center on negotiations to secure a $500 million credit line from GE Capital.
Borders, the second-largest book chain in the United States, announced in late December that it would delay payments to key publishers and distributors, leading some — such as Diamond Book Distributors — to stop shipping books. Jacket Copy reminds us that Borders Group is closing nearly 200 Waldebooks and Borders Express outlets before the end of the month. Additionally, it’s shuttering 17 Borders superstore locations nationwide. [The New York Times, The Wall Street Journal]"

When you want to turn delayed payments into loans, you are on the verge of utter destruction. I'm thinking if Borders isn't bought out by Barnes and Noble or some company they will end the same way Circuit City did when they were unable to get a buyer.  By getting the credit line from GE Capital they are essentially saying, "We're broke." The February 1st deadline may be just that, a line to the death of Borders (how dramatic)!

One of the two Borders a bit out of my town are closing down--although the claim is that it is a conflict of the store not wanting to agree to a new lease deal with the mall. This is a story I am inclined to believe because other stores in the mall are closing down too for the same reason. Oddly enough, the smaller Borders at the less popular mall in another town close to where I live is safe for now.

I guess come February we will know what the future holds.

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