Borders, the beleaguered bookseller, is preparing to file for bankruptcy as early next week after efforts to refinance its debt faltered, people briefed on the matter said Friday.[...]
The company had largely failed to persuade publishers to convert payments they had been owed since late last year into interest-bearing loans.
Neither of Borders’ biggest shareholders — the company’s chairman and chief executive, Bennett S. LeBow, and the hedge fund manager William A. Ackman — has indicated a willingness to put new money into the bookseller, these people said. Mr. Ackman disclosed in a regulatory filing late last year that he would be willing to loan Borders up to $960 million to finance a merger with Barnes & Noble, the company’s bigger rival.Publishers are truly stuck between a rock and hard place when it comes to dealing with Borders. On the one hand, they, as a group, have potentially lost several hundred million dollars on books already delivered to the chain. On the other, if they cannot find a way to work with Borders that will keep the company in business, a major seller of printed books is lost to them forever. In today's publishing environment, one has to wonder if such a large chain of bookstores can ever be replaced.
Interestingly, Borders has apparently not given up on the idea of forcing itself on the Barnes & Noble chain. Such a merger might save a healthy percentage of the Borders outlets (for now), but I can't help but wonder how the deal would affect the economic health of the already weakened B&N chain.
If you're a gambler, Borders stock can be had for about 25 cents a share. Do you feel lucky?