You are viewing your 1 free article this month. Login to read more articles.
Borders US has cut its full-year losses by nearly a third and made a net income of nearly $60m (£39m) for the three months to 30th January, according to results released by the retailer today.
A new $90m loan has been taken out, $10m of which will be paid by the end of the year. It has also set up a new credit facility of $700m, and paid off its $42.5m loan owed to Pershing Square Capital Management. According to reports the deal means the prospect that the retailer will be forced to file for Chapter 11 have been reduced.
Borders Group interim president and chief executive Mike Edwards said: "Restoring the financial health and profitability of the company remains our top priority. 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."
The $700m credit facility, which matures in March 2014, is for "general corporate purposes" and has been set up with a number of organisations,replacing the existing revolving credit agreement, which would have matured in July 2011. Banc of America Securities, Wells Fargo Retail Finance, J.P. Morgan Securities and GE Capital Markets are joint lead arrangers and book runners.
The company sustained full year losses from continuing operations of $110.2m for year to end-January 2010, compared with $184.7m in 2008. It also cut its net cash debt by just over 13%, to $245m. However, comparable store sales in the fourth quarter declined 14.0% and 8.5% in the Borders and Waldenbooks segments, respectively. For the full year, comparable store sales declined 14.4% and 8.1% in the Borders and Waldenbooks segments, respectively. Total revenues dropped nearly 14% to $2.8bn from $3.3bn for the full year, but the company also managed to cut the cost of goods sold to $2.19bn from $2.5bn.
The company closed seven Borders stores in the financial year, leaving 508 branches, and 186 Waldenbooks Specialty Retail locations were shut in the fourth quarter.