Wiley won’t report its 3rd quarter earnings until March 10, but today the publisher stated they will write off a pre-tax bad debt expense of approximately $9m (or $6m after-tax) from Borders. According to the SEC filing, “This net charge represents the difference between Wiley’s outstanding receivable with Borders and our expectation of potential offsets and recoveries in the future, and existing reserves for this customer.” Wiley stopped shipping books to Borders in December, when the retailer first indicated it would delay paying vendors, and as such Wiley further states that “no additional charge or bad debt expense with respect […]
Finance
Canadian Distributor HB Fenn Initiates Bankruptcy Proceedings
Meanwhile, the surprise bankruptcy filing came yesterday from Canada, where the country’s largest distributor HB Fenn & Company initiated bankruptcy proceedings under the country’s Bankruptcy and Insolvency Act. In a brief statement Fenn said it had “encountered significant financial challenges due to the loss of distribution lines, shrinking margins and the significant shift to e-books, all of which have significantly reduced the company’s revenues.” The company’s Lisa Winstanley told the National Post more bluntly, “we’re ceasing operations effective immediately.” The paper calls it “the largest collapse of a Canadian publishing company since General Distribution Services/Stoddart Publishing went under in August […]
Borders Won’t Make January Payments, Either, And They Aren’t Paying Rent
Borders officially announced Sunday night that it will not be sending vendors payments due at the end of January either. And they indicate that publishers are not the only ones being stiffed, saying they are also “delaying additional payments to landlords and other parties.” Not paying rent is more drastic than holding off vendors, and indicates the company’s liquidity crisis continues to worsen. They say the non-payment (which they call a “delay” in the press release, but that’s what you call it when you intend to pay someone in full a little while later, which is not what is proposed) […]
Waterstone’s Tells Publisher They Are Cutting Orders As of March
As part of Waterstone’s perpetual turnaround efforts in the UK, the chain informed multiple major publishers by e-mail earlier this week that for new titles coming in March they are cutting their initial orders by approximately 20 percent. Publishers were asked to cancel existing pre-orders so that the chain can place new orders at the lower inventory levels. They told publishers that “initial over-ordering of new titles” is continuing to create “substantial unnecessary costs across the supply chain, most notably in returns.” One UK executive noted that “they’re managing their working capital very carefully for obvious reasons” but the good […]
Borders Still Needs $125 Million from Publishers to Close GE Financing
Borders announced on Thursday night at long last what they have basically been saying for a month: they have a heavily-contingent financing “commitment” from GE Capital, Restructuring Finance for a new $550 million line of credit. Among the many complex “conditions” to obtain the new line is that $125 million in vendor payables must be converted into debt (or, alternately, that “external sources” provide an equivalent amount of additional financing.) Additionally, CEO Mike Edwards now admits (or threatens, depending upon how you view it) that “it is prudent as well for Borders to explore alternative avenues, including the possibility of […]
With Sale of Day by Day Kiosks to Calendar Club, Borders Raises Some Cash
It remains to be seen whether publishers will accept Borders’ proposed plans for renegotiating credit arrangements by the reported February 1 deadline, but the retailer will get at least some cash from the sale of its seasonal calendar kiosk service, Day By Day Calendars, to competitor Calendar Club LLC. The purchase, under negotiation for some time, closed last Wednesday and was announced to Borders staff on Friday by CEO Mike Edwards. In a telephone interview, Calendar Club CEO Marc Winkelman said the deal has been in the works since the fall, when Borders approached Calendar Club along with other prospective […]