(Updates with total credit facility amount in first paragraph.)
June 20 (Bloomberg) -- Borders Group Inc., the bankrupt U.S. bookstore chain, asked a judge to approve an amendment to its $505 million loan facility and plans to hold an auction on July 19.
Borders wants to complete a sale by July 29, according to a filing in U.S. Bankruptcy Court in Manhattan. The company is “encouraged that one of the parties presently negotiating with the debtors will emerge as the successful buyer,” Andrew Glenn, a Borders lawyer, wrote in the June 17 filing.
Borders will pursue a “dual-track process” so it can proceed with a sale to liquidators if it isn’t acquired as a going concern, Holly Felder Etlin, senior restructuring vice president, said in a separate court filing. Borders, the second- largest U.S. book chain after Barnes & Noble Inc., filed for bankruptcy protection in February.
Borders officials “have been in talks with a number of parties that have shown significant interest in acquiring a substantial amount of the debtors’ assets on a going-concern basis,” including stores that might be closed, Etlin said.
The Ann Arbor, Michigan-based company has 405 stores after shutting 237. Borders seeks to expand its minimum availability requirements from $25 million to $30 million. Borders says it will pay a $1 million fee for amendments to the lending facility. An amended loan agreement is to be considered at a June 22 hearing, as well as calls for approval of auction procedures by July 15.
Najafi Cos., a Phoenix-based private-equity firm, is considering buying Borders and is performing due diligence, a person familiar with the matter said earlier this month.
Gores Group LLC, a Los Angeles-based private-equity firm, is bidding for at least half of Borders’ stores, another person familiar with the matter said June 1.
Najafi bought the French Direct Group Business of CD and DVD clubs from Bertelsmann AG, Europe’s biggest media company, in May and acquired its North American Direct Group division in 2008.
Borders recorded a loss of $479.9 million for the year ended Jan. 29 on sales of $1.67 billion. It listed assets of $1.28 billion and liabilities totaling $1.29 billion.
The case is In re Borders Group Inc., 11-10614, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
--With assistance from Bill Rochelle and Tiffany Kary in New York. Editors: Stephen Farr, Julie Alnwick.
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