Landlords join the list of parties stung by Borders' financial troubles
Ann Arbor-based Borders Group Inc. said late Sunday that it would delay payments to some landlords in an effort to preserve its ability to operate its day-to-day business.
Borders said in a statement that it would "delay payments to certain parties — vendors, landlords and others — scheduled for the end of January."
The move is designed to help the company boost its financial position while it tries to secure new financing and new agreements with its publishers. The company had already suspended payments to some publishers.
The news comes after Borders said Thursday that GE Capital had agreed to provide a new $550 million line of credit if Borders is able to line up other sources of funding, convince its publishers to agree to new financial arrangements and identify new stores to close.
Borders stock (NYSE: BGP) slipped 8.12 percent to $0.78 minutes after the market opened this morning.
Borders, which employs about 550 workers at its headquarters in Ann Arbor, is actively trying to avoid bankruptcy — a process that would almost certainly wipe out the equity of its shareholders, result in many store closures and raise the possibility of liquidation.
But bankruptcy would also give the company a chance to reduce its costly lease footprint. That means landlords may be reluctant to force Borders to deliver January payments immediately.