Doran Robinson previously worked for healthcare information technology vendor athenahealth.
Direct Brands has offered $215.1 million for Borders.
It’s been a long fall businesswise for Borders Group, once the nation’s second-largest books retailer.
Now the fall is pretty much complete on the news that Borders, which filed for Chapter 11 bankruptcy protection in February with the U.S. Bankruptcy Court for the Southern District of New York, has entered into a preliminary agreement to be sold at an upcoming auction to Direct Brands, a portfolio company of Najafi Cos., an investment banking firm based in Phoenix.
Najafi and Direct Brands, which markets and distributes books, music and videos for direct marketing brands such as BMG Music Service, Columbia House DVD, BOMC2.com, Doubleday Book Club, and Book of the Month Club, put in a stalking horse bid of $215.1 million to acquire Border’s and all of its assets, including Borders.com, and assume about $220 million in debt.
A stalking horse bid is an initial bid on a bankrupt company's assets from an interested buyer chosen by the bankrupt company that sets the floor for minimum acceptable bids. A court hearing on the bid is scheduled for July 21 in New York. Borders didn’t say if it has received any other bids.
If the court does approve the Direct Brands bid, Borders would operate as a wholly owned subsidiary, the retailer says. As part of the agreement with Direct Brands, Hilco and Gordon Brothers, a pair of retail asset liquidation companies, also have agreed to acquire any store locations that are ultimately not included in the sale and will close those stores in an orderly manner, says Borders. Borders, which earlier announced plans to close more than 200 under-performing stores, didn’t say how many other locations might be closed.
If the Direct Brands deal falls through, Borders, No. 200 in the Internet Retailer Top 500 Guide, also has arranged an alternative proposal required under the company's debtor-in-possession financing agreement, to sell all the assets to a joint venture led by Hilco and Gordon Brothers.
"We are pleased to take another important step forward as we position Borders for a vibrant future and sustainable earnings growth,” says Borders president Mike Edwards. “Since the filing, we have made significant progress in reducing our cost structure, refocusing our merchandise offering, and building our eBook business. We look forward to working with a supportive partner as we continue to execute on our turnaround strategy."