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Borders: We need credit

By Hibah Yousuf, staff reporter

NEW YORK (CNNMoney) -- Shares of Borders Group plunged 22% Friday after the cash-strapped bookseller said it is delaying payments to some publishers.

The news came just weeks after the nation's second-largest bookseller said a third party lowered the value of its inventory. That weighed on Borders' borrowing capacity and forced it into discussion with senior credit facilities to refinance its debt.

"As part of this potential refinancing, Borders has determined that it is necessary to restructure its vendor financing arrangements and is delaying payments to certain of its vendors," said Borders spokeswoman Mary Davis.

Davis added that Borders (BGP) has notified the vendors and will be working with them to restructure payment arrangements.

She also warned that the company's refinancing and restructuring attempts may fail, in which case the company could violate its credit terms as early as the first quarter of 2011.

Earlier this month, Borders reported a loss of $74.4 million for the third quarter, nearly twice as deep as the loss posted a year earlier. Borders and other bookstore chains have been struggling to improve their bottom lines as consumers increasingly move to e-readers.

The company said it was considering the sale of some assets and unspecified cost-reduction measures in an effort to resolve its situation. To top of page

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