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Liquidity Issues at Borders Bookstore

Even as Borders announced today that it is borrowing $42.5 million from its largest shareholder, the bookstore chain's Brentwood outpost, which has been facing liquidity problems of its own -- namely a ruptured water main -- will reopen in early to mid-May.

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Though both the Associated Press and the online industry newsletter Shelf Analysis reported that Borders is "for sale," Borders district marketing manager Kelly Mumm says that is inaccurate.

"We announced our intention to seek strategic alternatives to fund our business growth in the long term," she writes in an e-mail.

Pershing Square Capital, a hedge fund, is Borders' largest shareholder. In addition to the loan, it has offered $125 million for Borders' UK, Australia, New Zealand and Singapore divisions, as well as the Paperchase stationery store.

Borders has until January 15, 2009, to make a final decision whether to sell to Pershing or another buyer, or not at all.

Meanwhile, work continues at the Brentwood store, which has been closed since a water main broke at approximately 3 a.m. on February 14, flooding the first floor. A notice on the door encourages customers to go to other local Borders stores, but the closest bookstore, the Ladue Barnes & Noble, reports an increase in business and recently extended its hours to match those of Borders. It has not, unfortunately, added any more comfy armchairs, which was a prime reason to read, er, shop at Borders in the first place.

-Aimee Levitt

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