Borders Completes Refinancing

-- Publishers Weekly, 4/7/2008 7:12:00 AM

Borders Group has finalized its new financing agreement with Pershing Square Capital Management, its largest shareholder, under terms more favorable than the original deal. One major change is the lowering of the interest rate from 12.5% to 9.8% that Borders will pay on the $42.5 million loan from Pershing. The 12.5% rate had caused some concern among analysts and publishers about the high cost Borders would be paying for the financing.

Pershing has also upped its offer to acquire Borders’s international subsidiaries from $125 million to $135 million. Pershing will acquire the operations if Borders cannot find another buyer. The number of warrants that will be issued to Pershing has also been lowered to 9.55 million from 14.7 million.

Borders CEO George Jones said that with the refinancing complete, the retailer will now turn its attention to reviewing its strategic alternatives.