Borders On Life Support: GE Capital Agrees to $550 Million in Financing

Borders Book Group may have a second chance at life. The bookseller was able to secure $550 million in financing from GE Capital yesterday. While this is good news in the short term, Borders has still not ruled out bankruptcy.

The financing deal comes after the struggling bookseller made employee layoffs, stopped payment to some publishers and announced the closing of a distribution facility. In other words, GE gave Borders a stay of execution.

Borders Group president Mike Edwards said in a press release:

“We are pleased that, after a thorough review of our business strategy and related long-term potential by GE Capital and outside experts, GE Capital is committing to put in place a new senior financing facility for the company. This is an important step for Borders toward implementation of its comprehensive plan to reposition itself as a vibrant national retailer of books and other related products to the consumer. We strongly believe that, based on our business strategy, Borders will be able to transform its business to capitalize on the evolving reading marketplace and perform as a best-in-class destination and shopping experience for consumers.”

Furthermore, Borders will shift their focus to 5 different areas:

• Continuing to expand and enhance the Borders Rewards Plus program;
• Strengthen the company’s position as a purveyor of content by aggressively growing Borders.com and eBook market share;
• Expand and enhance the company’s overall retail mix, including non-book offerings, to improve profitability and offset the digital effect;
• Aggressively reduce costs across the business, including costs in the supply chain network and store portfolio;
• Make strategic investments in IT to improve the customer experience.

I’m not sure exactly how Borders will “Strengthen the company’s position as a purveyor of content by aggressively growing Borders.com and ebook market share.” Because they got into the ebook game so late, the chance to become a major player might have already passed.

Will they come out with their own Borders-brand eReader? Or will they sell a more diverse selection of eReaders? One thing is clear, however: In order to survive 2011, Borders must figure out how to capitalize on digital content. If they don’t, Borders won’t be around much longer.

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• Borders finally jumps into the ebook market
• Borders Facing Major Problems in 2011
• Libre eBook Reader and Kobo eReader coming July 2 to a Borders near you
• Can Borders Survive 2011?
• Borders, Barnes & Noble enter self-publishing game

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