L.A. private equity billionaire may buy at least half of Borders
A Los Angeles private equity firm, led by the billionaire brother of the financier who is buying the Detroit Pistons, is reportedly considering an acquisition of more than half of the bookstores owned by Ann Arbor-based Borders Group Inc.
Alec Gores' Gores Group LLC is discussing a possible bid to acquire part of Borders for around $200 million, according to a Wall Street Journal report published tonight that cited anonymous sources. Alec Gores' brother, Tom Gores, recently struck a deal to acquire the Detroit Pistons.
Alec Gores' firm is reportedly managing a $2 billion pool of cash designated for acquisitions.
Borders, which filed for Chapter 11 bankruptcy in February, will have about 270 superstores and about another 130 small-format stores. The firm had about 500 superstores when it filed for bankruptcy.
Borders is actively developing a reorganization plan and trying to convince publishers to agree to new product shipment terms, which CEO Mike Edwards has identified as critical to the company's viability.
According to the WSJ report, Gores would reportedly continue to operate Borders "as a going concern," a term for an independently operating business. It's not clear whether that would involve keeping the company's Ann Arbor headquarters, where fewer than 400 employees remain.
Meanwhile, Borders is set to argue Thursday in U.S. Bankruptcy Court's Southern District of New York that it deserves a four-month extension on its exclusive right to file a reorganization plan. But the company's top creditors — namely, publishers — objected to that motion and want the right to file their own competing plan.
The deal negotiations come after Borders' top creditors filed a motion last week asserting that Borders is "likely" to sell its assets within the next 30 to 60 days instead of reorganizing under bankruptcy protection.
Borders has lost some $180 million since filing for bankruptcy.