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Borders Receives Refinancing Commitment from GE Capital

January 27, 2011
ANN ARBOR, MI—Jan. 27, 2011—Borders Group has received a commitment from GE Capital, Restructuring Finance to provide a $550 million senior secured credit facility that, upon completion, will provide Borders with the financial flexibility and an appropriate level of liquidity to move forward with its strategy to reposition its business model and the Borders brand.

GE Capital provided its financing commitment following a comprehensive review of the company’s strategic plan to restructure its business model by focusing on core business areas in order to improve profitability and cash flow.

Borders Group President Mike Edwards stated, “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.”

Under the new business plan, the company's strategy will focus on five key 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; and

•  Make strategic investments in IT to improve the customer experience.

Borders previously reported that, as part of its refinancing efforts, it had delayed payments to its vendors. Subsequently, the company has been in discussions with certain of those vendors on restructuring its financing arrangements. The company has also been in discussions with certain landlords and other parties with respect to arrangements, including financing arrangements, that support the company’s business plan. The company believes that today’s commitment from GE Capital positions Borders well to move the business forward, and expects to demonstrate to its vendors how their support for Borders will be to the benefit of the company, the vendors and their shared consumers.
 

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