In the wake of the Borders Group announcement that it is suspending payments to some publishers, at least one major New York City house has suspended shipping titles to the retail chain. While it has been reported that academic publisher Rowman and Littlefield has also stopped making shipments to the retailer, the house is distributed by the National Book Network, which has suspended shipments to Borders for all of its distribution clients. While it is unclear how many publishers have suspended shipments to the troubled retail chain, the situation remains fluid. PW has learned that Borders has located a new source of financing and a group of Borders executives will be in New York City this week to present the plan to publishers.
While Borders declined to comment specifically on the suspension of shipments, spokesperson Mary Davis confirmed that Borders representatives would be in New York and “in discussions regarding the refinancing of existing senior credit facilities.” According to sources, a contingent of Borders executives will be in New York to discuss a new refinancing plan that includes new money from a new bank. However the new financing comes with a new set of demands, according to the source, which will include publishers taking a note in exchange for the missed payment from Borders as well as a call for a bigger financial commitment to Border’s debt service from Bennett Lebow, the retail chain’s largest shareholder. Nevertheless, publishers appear willing to make a deal, although one house told PW, “it would have been nice if they told us they had a plan before they cut us off."
While Barnes & Noble reported that comp store sales rose 9.7% for the nine week’s ending Jan. 1, including record sales on Dec. 23, Borders is reeling from a continuing drop in sales--third quarter comp sales dropped 12.6%. Borders carries about $450 million in trade payables on its balance sheet. While the company has faced crises over its debt service in the past and managed to find financing, the current crisis looks to be Borders’ toughest challenge ever.
*From an article in PW Daily