Borders reached an agreement Thursday evening with Najafi Companies to sell an undetermined number of stores for $215.1 million in cash plus $220 million in assumption of liabilities. Under the preliminary agreement, Najafi, parent company of the book club Direct Brands, will become the “stalking horse” in an auction set for later in July. As part of the deal, the liquidators Hilco and Gordon Brothers have agreed to acquire any store locations that are not included in the sale “and will close those stores in an orderly manner,” according to the Borders’s statement. According to the motions, it is not known how many stores may be included in the sale. However, it does include all Borders assets, including its interest in Kobo.
Under steps outlined earlier, Borders needed to name a stalking horse by July 1, ahead of a July 19 auction. In the release issued Thursday, Borders said it expected the tentative purchase agreement to occur prior to a July 21 hearing. Bids are due July 17 and if Najafi emerges as the winner, Borders would operate as a wholly-owned subsidiary of Direct Brands. If no sale agreement is reached with Najafi or another company Borders said it has a deal with a joint venture consisting of Hilco, Gordon Brothers, SB Capital Group, Tiger Capital Group, and Great American Group to liquidate the company’s 399 stores. If Najafi is outbid for Borders, the requested breakup fee is $6.45 million. It estimates that a liquidation of the chain would bring in $252 to $284 million. A chainwide Going Out of Business/Store Closing sale would have to take place on or before July 22. However, if a going concern sale is approved it would take place on or before July 29, and no later than August 5.