Borders Group (BGP) Surges 33% On News Of Doubled Profits, Loan Repayment and Credit Agreement
Shares of Borders Group, Inc. (NYSE: BGP) surged in after hours trading after the book seller reported that 4th quarter profits more than doubled and that it repaid a $42.5 million loan from the company’s largest investor, William Ackman’s investment firm Pershing Square. Benzinga reported this news a full hour before it was known to the rest of the public. If you bought the stock when we reported it, you had the opportunity to make approximately 30% on your money.
Borders Group had until Thursday to repay the loan and at least one analyst had voiced a concern over whether or not the company would be able to do so.
Borders Group reported 4th quarter earnings of $59.9 million, or 91 cents per share, up from $29.6 million, or 49 cents per share, a year earlier.
The current quarter’s results included an income tax benefit of $30.1 million, while last year’s quarter included goodwill impairment expenses of $40.3 million.
Borders Group also announced that it entered into a new, $700 million credit agreement. The new, $700 million senior secured asset-based credit facility matures in March 2014 and replaces the company’s existing revolving credit agreement, which would have matured in July 2011. Banc of America Securities (NYSE: BAC), Wells Fargo Retail Finance (NYSE: WFC), J.P. Morgan Securities Inc. (NYSE: JPM) and GE Capital Markets, Inc. acted as joint lead arrangers and book runners.
However, the news wasn’t all good, as Borders Group reported 4th quarter revenue fell 13% to $946.5 million from $1.09 billion, a year earlier. Same store sales dropped 14% at Borders bookstores and 8.5% at Waldenbooks.
Shares of Borders Group were up more than 33% in after hours trading, at $2.30 as of 7:22 PM.