May 24, 2010, 4:29 PM

Borders raises $25 million and names a new chairman

Borders Group Inc. has raised $25 million in a private sale of 11.1 million shares to private equity firm Vector Group Ltd., which is controlled by Bennett S. Lebow. Lebow is now both the company’s biggest shareholder and its chairman.

Internet Retailer

Borders Group Inc. has raised $25 million in a private sale of 11.1 million shares to private equity firm Vector Group Ltd., which is controlled by Bennett S. Lebow. Lebow is now both the company’s biggest shareholder and its chairman.

The investment comes less than a month before Borders, No. 194 in the Internet Retailer Top 500 Guide, plans to launch its Kobo eReader and a new section of Borders.com that will sell electronic books. Borders also aims to launch Kobo apps for ordering e-books through mobile devices and PCs, and, in August, it will launch in-store Area-e shops for downloading e-books. In moving into e-books, Borders is aiming to catch up with its two biggest rivals, Barnes & Noble and Amazon.com Inc.

Borders says the $25 million capital infusion will strengthen the company’s balance sheet and help fund the transformation of the Borders brand, which includes growing Borders.com and developing strategic business partnerships. Following completion of the stock sales last week, Borders’ board named Lebow chairman.

"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," says Mike Edwards, Borders interim president and CEO.

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