Ann Arbor, Mich. Borders Group and Pershing Square Capital Management announced Tuesday they have agreed to a one-year extension of the $42.5 million senior secured term loan.
The loan has been extended from April 15, 2009 until April 1, 2010.
The loan will be extended on its current terms, said the companies, including an interest rate of 9.8%. At the same time, Borders Group is resetting the strike price on Pershing Square's 14.7 million warrants to $0.65 per share, and the company will allow its option to "put" its U.K.-based Paperchase gifts-and-stationery business to Pershing Square to expire.
"The extension of the loan gives us some necessary breathing room, which is important in the current economic environment,” said Borders Group CEO Ron Marshall. “We are also pleased to retain Paperchase, which is a successful and important business throughout the United Kingdom and other markets, as well as in our Borders superstores throughout the United States."