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Borders Books Faces Loan Deadline; Bankruptcy Possible?

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March 25 – April 1, 2010 Edition Borders Books Faces Loan Deadline; Bankruptcy Possible?

ANN ARBOR, MICH/AUTHORLINK NEWS/March 24, 2010–A New York hedge fund manager may control the fate of Borders Group Inc., even as the distressed Ann Arbor-based book store chain advertises to hire several people for its digital division, according to the Ann Arbor Business Review.

Borders has an April 1 deadline to repay a $42.5 million loan owed to Pershing Square Capital Management, a hedge fund managed by investor William Ackman, who’s already renegotiated the loan three times.

Ackman could opt to extend the loan again, giving Borders more runway to pursue a profitable business model. But if he decides to force repayment, Borders may be forced to fork over cash vital to its daily operations, the Ann Arbor report said.

Borders had $32.8 million in cash as of Oct. 31, down from $38.4 million at the same point in 2008.

The company employs 646 workers at its headquarters on Ann Arbor’s Phoenix Drive.

Turnaround experts familiar with major corporate restructurings told AnnArbor.com that they’re concerned Borders won’t avoid bankruptcy much longer.

A spokeswoman for Ackman said he was not available for comment.

Read the full story at Ann Arbor Business Review.