Borders to end cafe deal with Seattle's Best Coffee

The move comes as Borders is examining all of its contracts in an effort to save costs and identify a profitable business model that would allow the company to emerge from Chapter 11 bankruptcy.

"This change will allow Borders to operate its own cafe program, enabling us to reduce the licensing fees we pay, generate significant cost savings, and boost cafe profitability," Borders spokeswoman Mary Davis said in a statement. "The change will also provide us with the opportunity to tailor menu items and the cafe experience based on our customers’ preferences.”

Borders also filed a motion with the U.S. Bankruptcy Court's Southern District of New York asking the court to allow the company to file its official request to reject the Seattle's Best contract under seal. Under bankruptcy code, companies have wide leeway to reject or renegotiate previous business agreements, including leases and contracts.

Lawyers filed a motion saying the motion should stay private "to protect the confidentiality of the sensitive commercial information" involved with the Seattle's Best agreement.

Starbucks stock (NASDAQ: SBUX) was up 1.34 percent to $37.11 at 12:28 p.m. today.

Borders signed a deal with Starbucks in August 2004 to integrate Seattle's Best into its superstores.

Since its bankruptcy filing in February, Borders has closed nearly 230 superstores, slightly less than half of its large-format locations.

The company is currently trying to convince publishers to agree to new terms on product shipments, which Borders views as critical to the company's long-term viability.

Borders employs fewer than 400 workers at its Ann Arbor headquarters.

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