Borders Group Inc. (BGP) announced that an entity controlled by
Vector Group Ltd. (VGR) Chairman Bennett LeBow has agreed to invest
$25 million in the struggling bookseller as the company continues
efforts to boost capital levels.
LeBow will also become Borders's chairman. Howard Lorber,
president and chief executive of Vector--a tobacco company--will
also join Borders's board. Meanwhile, Richard McGuire has resigned
as chairman and left the panel as the investment's terms call for a
nine-person board.
The company announced $790 million in new financing in March as
Borders deals with an ongoing sales decline. The company said
Friday that the investment from LeBow--which is buying 11.1 million
shares at $2.25 each, a 0.9% premium to Thursday's closing
price--will help to boost digital efforts and improve
brick-and-mortar results.
The stock recently fell 3.1% premarket to $2.16. LeBow's stake
would give him roughly 15% of the shares outstanding.
Borders said in March its fiscal fourth-quarter profit doubled
on smaller write-downs while revenue fell 13%. First-quarter
results are due Thursday.
-By Jodi Xu, Dow Jones Newswires; 212-416-3037; jodi.xu@dowjones.com