Borders Group Inc (BGP), the second-largest U.S. book chain, may file for bankruptcy as soon as next week, according to a report from Bloomberg News on Tuesday citing three people familiar with the matter.
The report was published just before the market close, at 3:50 p.m., and the effect on BGP’s pps was immediate. Shares of Borders plunged 35% before the close — the largest decline since December 2008 — and continued to lose value in after hours trading, falling another 17% to 38 cents p/sh.
The struggling chain, which has posted almost $800 million in losses since fiscal 2006, remains in serious financial trouble after delaying payments to vendors for a second consecutive month, a sign that the retailer is headed for bankruptcy if it doesn’t get an infusion of cash soon. Several private equity firms are considering whether to provide a junior loan to the Ann Arbor, Michigan-based company, Bloomberg reported, citing one of its unnamed sources. Bloomberg also said the bookseller is likely to close 150 stores.
Borders, which has seen its overall sales deteriorate 37.3% in the last three years, operates roughly 700 retail locations, including more than 500 superstores.
BGP was last quoted at 47 cents p/sh on volume of around 6.54 mln shares, according to Google Finance.