Borders repays loan to Pershing, Q4 profit doubles

Ann Arbor, Mich. The Borders Group said late Wednesday that it had repaid a $42.5 million loan from its largest investor, William A. Ackman’s Pershing Square Capital Management, and had secured a crucial refinancing deal. The deadline for the loan was Thursday.

The struggling bookseller said it had entered into a new $700 million asset-based credit facility from Bank of America and other banks, and had closed on a new $90 million term credit facility.

“We are pleased to have the continued support of our lending group and term loan investors,” said Mark Bierley, CFO, Borders, in a statement. “With the completion of these transactions, the company can turn its focus to driving sales growth and improving profitability.”

Also on Wednesday, Borders reported that its fourth-quarter profit more than doubled, to $59.9 million, even as sales dropped 13.3% to $937.3 million. Same-store sales declined 14.0% and 8.5% in the Borders and Waldenbooks segments, respectively.

For the year, Borders reported a loss of $110.2 million.

"Restoring the financial health and profitability of the company remains our top priority," said Mike Edwards, Borders’ interim president and CEO. "We took important steps toward this goal with the long-term extension of our existing credit facility and the additional capital provided by the new term loan. We have made significant operational and financial improvements and will maintain those disciplines as we shift our focus now to growing market share by acquiring, engaging and retaining customers through a transformation of the Borders brand."