WHS 'walks away' from Borders deal, as distributor cuts off supply

<p>At least one major distributor has ceased trading with Borders UK, according to sources spoken to by <em>The Bookseller</em>. It has also emerged that W H Smith has walked away from discussions over the purchase of Borders UK.</p><p>According to an email leaked to <em>The Bookseller</em> issued by The Book Service Ltd and Grantham Book Services, the distributor stopped Borders UK and Books Etc accounts earlier in the week. The distributor represents Random House, Little, Brown and the Independent Alliance companies.</p><p>Borders UK&rsquo;s financial director Mark Little had earlier written to the distributor, explaining that it had stopped a cheque payment banked on 16th November because it had &quot;overpaid [the distributor] by not netting off returns deductions from their payment.&quot; </p><p>The distributor told its clients: &quot;We have pushed for an immediate interim payment but this has been refused. Borders have committed to giving us a payment figure by this Friday 20th November.</p><p>&quot;In light of this situation we have taken the step to immediately stop Borders UK Ltd and Book Etc accounts. Also, all orders already in progress have been stopped and not despatched to our hauliers/couriers.&quot;</p><p>Random House refused to comment on its decision, or whether the situation had changed since Friday. </p><p>A publisher, who asked not to be named, said Borders had been returning old stock from titles launched as long as three years ago, in a bid to get returns payments. &quot;They have been sending back lots of old stock, trying to get returns authorisations,&quot; the publisher said. &quot;We haven&#39;t authorised these payments though, as they are not within the allowed time frame. The standard is usually 15-18 months.&quot; </p><p>According to<a href="http://www.retail-week.com/retail-sectors/entertainment/whsmith-pulls-ou... target="_blank" title="http://www.retail-week.com/retail-sectors/entertainment/whsmith-pulls-ou... <em> Retail Week</em></a>, Borders approached WHS last week with a view to buying the company, however talks were terminated this morning, the website said. An alternative buyer is being sought and RW said the chain was &quot;understood to have received several expressions of interest&quot;.</p><p>Borders has gone through a rocky 12 months, which has included having its <a href="../news/73223-insurer-cuts-off-borders-and-the-book-people.html" target="_blank">credit insurance withdrawn</a> a year ago, chief executive <a href="../news/91788-downer-leads-management-buyout-at-borders-uk.html" target="_blank">Philip Downer leading an MBO</a> in July, and <a href="../news/98109-borders-sets-out-single-brand-strategy.html" target="_blank">relinquishing the Books Etc brand</a>. The MBO was financed by &quot;wind up specialists&quot; Valco. </p><p>Earlier this week <em>The Bookseller</em>, reported that <a href="../news/103003-borders-uk-disbands-web-team.html" target="_blank">the retailer had disbanded its web team</a>, with the retailer thought to be trying to sell its web retail site to a third party developer. </p><p>No one from Borders was available to comment, while W H Smith declined.</p>