Some interesting notes from Borders (BGP) 8-K filed last night.
* Management as a group own 1.103 million shares making them a the 5th largest holder behind Citadels LP’s 3 million shares. Pershing is by far #1, Dremen Management is #2, and Deutsche Bank (DB)is #3.
* Most executive officers of the Company had received minimal or no bonus for the last three years.
Regarding Pershing and International Operations:
“The Purchase Offer Option is a backstop purchase offer that will give the Company the right, but not the obligation, until January 15, 2009, to require Pershing Square to purchase the Company’s Paperchase, Australia, New Zealand and Singapore subsidiaries, as well as its approximately 17% interest in Bookshop Acquisitions, Inc. (Borders U.K.) (collectively, the “Subject Companies”). Pershing Square’s purchase offer is at a price of $135,000,000 (subject to adjustment for indebtedness for borrowed money of the subject businesses and the after-tax benefit of cash remaining with the Subject Companies). Although the company believes that these businesses are worth substantially more than the backstop purchase offer price, the relative certainty of this arrangement provides the company with valuable flexibility to pursue strategic alternatives. Proceeds to the Company of any such purchase by Pershing Square would be first applied to repay amounts outstanding under the Term Loan Facility.
The Company may sell all of the foregoing businesses or may elect to sell only Paperchase and the Company’s interest in Bookshop Acquisitions (collectively, the “UK Business”) alone or together with the Company’s Singapore business. In the event of such election, the purchase price for the UK Business will be $65,000,000, or $67,500,000 for the UK Business and the Company’s business in Singapore (in each case, subject to adjustment).”
“Pershing Square has agreed not to interfere with the sale of the Subject Businesses to third parties until the acceptance of the Purchase Offer by the Company, and has agreed not to contact any potential alternative buyers, with whom the Company or any of its representatives are then in discussions with prior to December 15, 2008 (or until January 15, 2009 if the Company is then party to a definitive agreement for the sale of all Subject Businesses not yet sold).”
” The Company has retained the right, in its sole discretion, to forego selling some or all of the Subject Companies to any party, to sell some or all of the Subject Companies to one or more third parties, or to require Pershing Square to consummate the purchase transaction. Pershing Square has no right of first refusal or breakup fee or other preemptive right with respect to the sale of the Subject Companies by the Company to other parties.”
Regarding the Warrent to Pershing:
“The Warrants are freely transferable, subject to securities law restrictions, except the Side Letter provides that Pershing Square may not transfer (other than internally among its affiliates) any Warrants until January 1, 2009 or the earlier public announcement of the entry into a definitive agreement with respect to (or the completion of) a change of control or other extraordinary transaction involving the Company to which Pershing Square is not a party. In addition, Pershing Square has agreed not to sell or transfer any of its shares of the Company’s common stock until such time.”
No real bombshells here which is nice because it means Borders is doing a nice job disclosing relevant information to shareholders as it become available.
Disclosure (“none” means no position):Long BGP,
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