As Borders runs out of options and prepares to file for Chapter 11 bankruptcy protection, GE Capital, which committed to providing $450 million debtor-in-financing credit, is trying to limit its exposure, according to one major publisher.
Late last month GE had given Borders a tentative commitment for a $550 million credit line. But it was subject to a number of conditions, including financing from publishers and other vendors for $125 million and the successful syndication of $175 million of the senior credit facility with other lenders plus tthe completion of a store closing program. None of those conditions have been met yet, this publisher said.
One of the sticking points in that commitment that could be causing a hold up in Borders’s bankruptcy filing: the closure of 200 of its 650 stores. The company is said to be in talks with liquidators. But according to a report from Reuter’s yesterday, publishers want a say in the price of books in store closing sales.