Less than 24 hours before it was due to repay a $42.5 million loan to its largest shareholder, Borders Group has arranged new financing that will allow it to pay back the loan and also give it an extra three years on its credit agreement that was set to mature in July 2011. The deals significantly diminish the prospect that the retailer will be forced to file for Chapter 11 any time soon.

The smaller of the finance deals, a $90 million term loan credit facility, matures in March 2014. The new $700 million asset-backed credit facility also expires in March 2014. Borders said it will use borrowings from the facility for general corporate purposes. More details of the financing deal, which involved several banks and financial institutions, will be released shortly.