Borders has had to inform publishers that it may be late on payments due to its efforts to refinance its debt, according to the Wall Street Journal.
And things could get worse.
The retailer also said "there can be no assurance" that its larger refinancing efforts will be successful. The company reiterated an earlier disclosure that without refinancing, it could violate its existing credit agreements in the first quarter of 2011 and "experience a liquidity shortfall."
Earlier this month, there was some talk Bill Ackman was going to help finance a Borders led takeover of Barnes and Noble. That's quieted a little, but likely remains on the table.
That deal still makes a lot of sense, in terms of getting Borders deeper into the digital book store and hardware game, via Barnes and Noble's Nook.
But the real problem may not be where Borders isn't operating, but where it is. Consumers are simply buying less media (magazines, books, movies, and CDs) in store than ever before, as online sales surge.
That's not going to change. But both of these companies have huge, inefficient footprints and in any sort of combination, there would need to be cuts or alterations to that presence.
