Borders falls on report, bankruptcy possible
Borders shares, which were already trading well below a dollar, fell 26 cents on reports of a possible Chapter 11 filing.
NEW YORK — Borders shares continued to fall in premarket trading on Wednesday after media reports said it may file for Chapter 11 bankruptcy in coming weeks.
Late Tuesday, Bloomberg News, citing sources it did not name, said the struggling bookstore chain could file for bankruptcy reorganization and close 150 stores. That sent shares, which were already trading well below a dollar, down 26 cents to close at 47 cents.
In premarket trading, shares slid 11 cents to 36 cents.
Borders spokeswoman Mary Davis said the company had no comment beyond what it said when it received a commitment for $550 million in credit from GE Capital last week, with several strings attached. At that time the company said it was exploring strategic alternatives "including the possibility of an in-court restructuring."
A bankruptcy reorganization generally wipes out shareholders' stake in a company.
Sunday, Borders said for the second time in about a month that it would delay payments to vendors to preserve cash. Part of Borders' deal with GE Capital requires it to convince vendors to finance part of what Borders owes them.
Borders Group Inc. has seen its sales and profitability fall as traditional book sales decline, consumers keep a lid on discretionary spending and competition — from discounters to electronic books — stiffens.