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Leak shows Borders administrator may have buyer
15.12.09 | Graeme Neill
Borders administrator MCR is making a statement about the future of the business today (15th), with a leaked document suggesting that it has found a buyer for 23 "store assets". The document also revealed that it would "threaten to leave stock" in stores if it cannot reach an agreement with publishers over Retention of Title.
The origins of the document are not known, and neither is the date when it was last updated. But two of the names referred to within it work for Hilco, parent of Valco, which backed the management buyout of Borders in July. It has been reported that Hilco is advising the administrator. A spokesman for MCR denied that the document belonged to them. He said: "I can confirm that that's not an administrator's document." In a written response sent yesterday (14th), when The Bookseller approached MCR with details from the document, the administrator said: "At this time the future strategy of Borders UK Limited is still under review, with a statement on future plans expected to be announced [today]."
The document, leaked to The Bookseller yesterday (14th), claims publishers are seeking 100p in the pound but without holding a stock-take. The 'Issues List' document stated: "The plan is to trade through and try and reach a commercial settlement before the discount increases to a level where stock is being sold below cost, and threaten to leave stock if a commercial settlement isn't reached."
The Bookseller revealed last week that several publishers had been approached by MCR with offers of payment at a reduced rate. Hachette UK has begun legal action to compel MCR to recognise its retention of title claim and attempt to receive payment in full for debts.
There are a number of pending issues listed on the document, including under the heading "property" its "store assets" disposal, where it says that "23 store[s] confirmed and advised", with the "balance still to be decided". MCR is still trying to find a buyer for the remaining 22 stores out of Borders' original 45. The document stated that it was "examining store[s] with pre-paid rents to ensure these close last".
Under "closed issues", and dated 2nd December in the document, it states that "given the current sales trend there is a need to review phasing and calculate the potential augment requirement. Store closure analysis should be undertaken to identify the optimum closure date by store according to Profit/Stock Availability/Pre-payments to further enhance profit". The administrator has bought around £240,000 worth of bargain stock in addition to a £1m book order from Gardners earlier this month, but added that "final deliveries" would be sent to stores "11/12".
MCR has been running closing down sales at the 45 Borders stores since it went into administration last month. No final closure date has been confirmed, but last week the chain began selling fixtures and fittings, and staff were expecting "countdown to closure" signs to be erected in stores this week.