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Borders delays payments, shares drop

MoneyGeneric

Bookseller Borders Group Inc. (BGP-N) is delaying payments to vendors, a company spokeswoman said on Thursday, pushing its share price lower.

The news came just weeks after the company said it was trying to obtain new financing to avoid violating the terms of its credit agreements early next year.

"As part of this potential refinancing, Borders has determined that it is necessary to restructure its vendor financing arrangements and is delaying payments to certain of its vendors," Borders spokeswoman Mary Davis said by phone.

Borders has notified these vendors and will be working with them to restructure their arrangements with the company, she added. Davis did not give details on the vendors.

The company, however, said: "There can be no assurance that it will be successful in refinancing its senior credit facilities or restructuring its vendor financing arrangements."

In its latest third quarter, Borders reported a wider quarterly loss and said its borrowing capacity was cut after a third-party review that lowered the estimated value of its inventory if the book store chain had to liquidate it.

Bookstores like Borders and larger rival Barnes & Noble Inc. (BKS-N) have seen sales of physical books fall as readers increasingly turn to electronic reading devices and buy their books online.

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