Report: Borders’ largest investor sees ‘low probability’ of bankruptcy

New York City Borders Group shares spiked 38% on Wednesday after its largest investor, Pershing Square Capital CEO William Ackman, said he foresees a "low probability" of bankruptcy for Borders. Ackman made his remarks during an interview with cable business channel CNBC on late Tuesday.

However, Ackman did seem to suggest that the Borders could eventually merge with competitor Barnes & Noble.

"We don't see this as a likely bankruptcy," Ackman told CNBC. "It may become part of an industry consolidation at some point, or it may survive as a standalone company."

Borders has to repay a $42.5 million senior secured loan to Pershing by April 1. The deadline that has caused some investors and experts to speculate that Borders will have to restructure or liquidate. But Ackman's remarks reassured investors about Borders' short-term prospects despite dwindling sales.

Borders has contended with sharply falling sales for about two years and its CEO quit last week after only a year at the helm.