Liquidation Looms for Borders
After Najafi deal implodes, Borders choices for sale limited.
One of the largest newsstand providers for magazines, Borders Books
, is accepting bids to sell itself to liquidators after a deal with Najafi Companies fell through late Wednesday, with Borders Group Inc. filing papers in U.S. Bankruptcy Court for the Southern District of New York in Manhattan Thursday. The filing opens up bids, which is designed to identify a buyer to keep the company from being extinguished, until 5 pm Sunday.
The group had initially filed for bankruptcy protection in February. In July the Phoenix, AZ based Najafi Companies
, a private equity investor, proposed to buy the company for $215 million in cash and would accept about $220 million of the failing company’s debt. The deal reached a standstill yesterday when the company balked the proposal for the bookseller and its properties, saying it would hinder the group from “liquidating it immediately for profit,” the Associated Press [AP] reports
The company, which employs 11,000, had 1,249 Borders and Waldenbooks stores at its height in 2003, according to the AP
, but now operates around 400 stores. The company started in 1971 with one store.
Hilco Merchant Resources, a liquidation group, is now the primary bidder, according to Reuters
, though Najafi Companies can submit a revised bid. The AP reports that Hilco Merchant Resources and the firm Gordon Brothers have a stronger bid, expected to pay between $252 million and $284million in cash.
According to Reuters
, “The Official Committee of Unsecured Creditors said in court papers that the Najafi plan ‘neither maximizes value’ for creditors ‘nor provides for the other benefits of a going concern,’ specifically, preserving jobs.”