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8-K - FORM 8-K - BORDERS GROUP INC | k49279e8vk.htm |
EX-10.1 - EX-10.1 - BORDERS GROUP INC | k49279exv10w1.htm |
EX-10.4 - EX-10.4 - BORDERS GROUP INC | k49279exv10w4.htm |
EX-10.3 - EX-10.3 - BORDERS GROUP INC | k49279exv10w3.htm |
EX-10.2 - EX-10.2 - BORDERS GROUP INC | k49279exv10w2.htm |
Exhibit 99.1
News Release CONFIDENTIAL |
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Investor Contact: |
Media Contact: | |
Mark Bierley |
Mary Davis | |
(734) 477-4105 |
(734) 477-1374 |
Borders Raises $25 Million Through Equity Financing to Support Key Financial and Strategic
Initiatives
ANN ARBOR, Mich., May 21, 2010Borders Group, Inc. (NYSE: BGP) today announced that an entity
controlled by Bennett S. LeBow has agreed to invest $25 million in the company through a private
purchase of 11.1 million shares of the companys common stock at a purchase price of $2.25 per
share and on other terms described below. The investment coupled with the companys recently
announced financing will strengthen Borders balance sheet and provide capital to help fund the
transformation of the Borders brand. Mr. LeBows investment will support several important
financial and strategic initiatives such as improving the companys capital position, addressing
the store network to maximize productivity and profitability, maximizing the digital opportunity
including growing Borders.com, and developing strategic business partnerships. The purchase is
expected to close later today.
In connection with the investment, Mr. LeBow has joined the Board of Directors and has also been
elected Chairman. Mr. LeBow is the Chairman of Vector Group, Ltd. (NYSE: VGR). Howard Lorber, who
serves as President and Chief Executive Officer of Vector Group, has also joined the Board of
Directors of Borders Group.
Bens investment will improve the companys capital position, and provide greater stability as we
execute strategies to transform the brand, said Interim President and Chief Executive Officer of
Borders Group, Mike Edwards. Ben brings the right combination of skills, experience, focus and
fresh perspective to his role as the new Chairman of the Board of Directors. As an astute investor
and business operator with a strong technology background and proven experience with driving
company turnarounds, he will play an extremely important role in helping us redefine the Borders
brand that is so critical to unlocking a turnaround for Borders.
Additionally, in order to create the nine-member Board as required by the terms of the transaction,
Richard Mick McGuire has resigned from the Board of Directors.
I am pleased to welcome Ben aboard as the new Chairman, said McGuire. Borders has made great
progress in improving its financial and operating condition by exiting non-core businesses,
reducing fixed costs, improving working capital efficiency, and focusing on operational excellence.
More recently, the executive team has begun the process of repositioning the business and in-store
experience to succeed in a future of electronic delivery. This effort is supported by an
exceptional group of directors who were selected for the Board because of their expertise in the
areas most critical to the Companys success. By adding Ben and Howard to this already talented
group, the Company is now in the best possible position to achieve its full potential.
Terms of the Equity Financing
Borders Group has entered into a purchase agreement relating to the investment that, among other
things, requires the company to seek approval from its shareholders for the issuance to Mr. LeBow
of a stock purchase warrant exercisable to acquire an additional 35.1 million shares of the
companys common stock at a price of $2.25 per share and for the issuance of the underlying 35.1
million warrant shares. The company expects to schedule a special meeting of its shareholders as
soon as practicable to seek approval for the issuance of the warrant and warrant shares. If the
issuance of the warrant and warrant shares is not approved by the companys shareholders, the
company will be obligated to issue to Mr. LeBow 35.1 million stock appreciation rights. Upon the
exercise of the stock appreciation rights, Borders Group would be required to make a cash payment
with respect to each right equal to the excess, if any, of the future market price of the companys
common stock over the $2.25 base price provided in the stock appreciation rights.
Indicative Support from Pershing Square
Pershing Square Capital Management, L.P. and its affiliates, which currently is a major shareholder
of Borders Group, has indicated its support for the transaction. As a result of the purchase of
common stock by Mr. LeBow, Borders Group will be required under the terms of its existing
agreements with Pershing Square and its affiliates to issue Pershing Square approximately 2.7
million warrants exercisable at a price of $0.65 per share. Upon the issuance of the warrant or
stock appreciation rights to Mr. LeBow, the company will be required to issue Pershing Square
approximately an additional 8.6 million warrants at the same $0.65 per share exercise price.
Rothschild Inc. served as financial advisor to Borders Group and Jefferies & Company, Inc. served
as financial advisor to Mr. LeBow. Baker & McKenzie LLP represented Borders Group and Latham &
Watkins LLP represented Mr. LeBow. Jones Day advised the Board of Directors of Borders Group in
connection with the transaction.
Details of the purchase agreement will be included in a Form 8-K to be filed promptly with the
Securities and Exchange Commission.
About Borders Group, Inc.
Headquartered in Ann Arbor, Michigan, through its subsidiaries Borders Group, Inc. (NYSE: BGP) is a
leading specialty retailer of books as well as other educational and entertainment items. The
Company employs approximately 19,500 throughout the U.S., primarily in its Borders® and
Waldenbooks® stores. Online shopping is offered through borders.com. Find author interviews and
vibrant discussions of the products we and our customers are passionate about online at
facebook.com/borders, twitter.com/borders and youtube.com/bordersmedia. For more information about
the company, visit borders.com/media.
Safe Harbor Statement
This release contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. One can identify these forward-looking statements by the use of
words such as expect, planning,
possibility, opportunity, goal, will, may, intend, anticipates, working toward and
other words of similar meaning. One can also identify them by the fact that they do not relate
strictly to historical or current facts. These statements are likely to address matters such as the
Companys future financial condition and performance (including earnings per share, the
profitability of Waldenbooks, liquidity, cash flows, debt levels, market share growth and other
sales information, inventory levels and capital expenditures) and its strategic initiatives such as
the expansion of product categories, including eBook content and eReaders. These statements are
subject to risks and uncertainties that could cause actual results and plans to differ materially
from those included in the Companys forward-looking statements.
These risks and uncertainties include, but are not limited to, consumer demand for the Companys
products, particularly during the holiday season, which is believed to be related to general
economic and geopolitical conditions, competition and other factors; the availability of adequate
capital including vendor credit to fund the Companys operations and to carry out its strategic
plans; adverse litigation results or other claims, the performance of the Companys information
technology systems and, with respect to eBook content and eReaders, the availability to the Company
of anticipated content levels and a variety of competitive devices.
The Companys periodic reports filed from time to time with the Securities and Exchange Commission
contain more detailed discussions of these and other risk factors that could cause actual results
and plans to differ materially from those included in the forward-looking statements, and those
discussions are incorporated herein by reference. The Company does not undertake any obligation to
update forward-looking statements.
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