Battle for Borders

To stop itself falling into administration, bookshop chain Borders is hoping to sell off around 36 of its 45 bookshops.

The company, with 45 stores in Britain, has been hoping to sell about 36 of them to WHSmith's while its subsidiary, Books etc, is holding closing-down sales at its remaining eight stores, which will probably shut their doors early in 2010, the British newspaper The Guardian reports.

According to the Daily Telegraph, WHSmith walked away from talks on Friday, removing hope it would secure a sale of the bulk of its store portfolio to the retailer.

It's believed that if Borders goes into administration, HMV, which owns Waterstone's would probably step in to cherry pick some locations.

Trouble

The arrival of cheaper online books and music retailers such as Amazon and play.com has hit all book and CD chains, Borders in particular.

A near-halving of its credit insurance has made it more difficult for it to obtain stock from suppliers. The company's management is worried that it does not have enough cash to trade successfully through the busy Christmas period.

Downturn

Borders demise comes amid a long decline in the high street for decades. It's almost a year now since the demise of Woolworths, which you can still see the empty storefronts of. We've also seen the closure of Zavvi and Tower Records.

Ownership

Borders was originally owned by the US book giant of the same name, but the UK and Ireland arm was sold to buy out group Risk Capital Partners - headed by Channel 4 chairman Luke Johnson - in 2007.

Management, led by chief executive Philip Downer and finance director Mark Little, then bought the group back with financing from Valco Capital earlier this year.

Downer was unavailable to comment to The Guardian, but it is believed that management at the group, which has a turnover of about GBP£150 million, may sell its online trading site and stores separately.

Borders' corporate finance adviser Clearwater last week put an advertisement in a financial newspaper offering the sale of 'a chain of book and entertainment stores'.

In the company's accounts, published in August, its auditor, Ernst & Young, raised doubts about its ability to continue as a going concern. In 2008, pre-tax losses widened from GBP£10.3 million to GBP£13.6 million.

Like this article? Get the RSS feed: