Borders Gets a New Loan, New Lease on Life
According to a press release, Borders' new senior secured asset-based credit facility has additional backing from Wells Fargo, JP Morgan and GE Capital, though Bank of America remains the administrative agent. Borders also secured an additional $90 million term loan credit facility, the bulk of which will mature in March 2014, backed by private equity firms including Stone Tower Capital, Tennenbaum Capital Partners, and Gordon Brothers Merchant Partners. "We are pleased to have the continued support of our lending group and term loan investors," said Borders Group Chief Financial Officer Mark Bierley in the press release. "With the completion of these transactions, the company can turn its focus to driving sales growth and improving profitability."
With the financial situation taken care of, Borders could finally report its fourth quarter and 2009 earnings, which it also did late Wednesday. For the period ending January 31, Borders reported net income of $59.9 million, or 91 cents per share, up more than double from the $29.6 million, or 49 cents per share, the company reported a year earlier. For the full year, Borders lost $110.2 million (or $1.83 per share) compared to a loss of $184.7 million (or $3.07 per share) in 2008. Overall sales fell 13.3% to $937.3 million. Borders' debt net of cash at the end of the quarter was $245 million, a $37.6 million reduction from a year ago.
At the company's superstores, total fourth quarter sales were $723.1 million, down 14.2% from a year ago. For the full year, total segment sales were $2.3 billion, down 13.7% from 2008. Comparable store sales at Borders dropped 14.0% in the fourth quarter and 14.4% for the full year, but when plummeting multimedia sales were factored out, comps decreased 10.2% in the fourth quarter and 10.8% for the year. Total fourth quarter sales for Waldenbooks were $163.0 million, a 16.7% decline from same period last year, and for the full year, total segment sales were $387.3 million, down 19.3% from 2008. Fourth quarter and full year comp store sales for Waldenbooks dropped 8.5% and 8.1%, respectively, in large part due to closing 186 stores, bringing the total store count down to 212.
"Restoring the financial health and profitability of the company remains our top priority," Borders Interim President and CEO Mike Edwards said in a statement. "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. I'm pleased with the cooperation we have received from our bank group, lenders, vendors, partners and associates who share our vision for a successful Borders."