May 14, 2010 / 5:46 AM / 8 years ago

INTERVIEW-Ackman says Borders not "out of the woods"

* Borders still troubled, key Borders investor says

* Refers to Pershing Square as a “stuckholder”

* Reaffirms belief may only be room for one U.S. chain

By Phil Wahba

NEW YORK, May 13 (Reuters) - Investor William Ackman said on Thursday that the No 2. U.S. bookseller Borders Group Inc BGP.N still has a long way to go before it can emerge from its troubles and re-iterated his belief that there might only be room for one national U.S. specialty bookstore chain.

“The company is by no means out of the woods,” Ackman told Reuters on the sidelines of a book signing at a Borders superstore in New York’s Columbus Circle.

Ackman’s Pershing Square Capital Management owns 17.7 percent of Borders, making the hedge fund its largest investor.

“At this point, we’re a bit of a ‘stuckholder’,” Ackman said. A ‘stuckholder’ is a term that denotes the owner of a struggling stock the investor is having trouble unloading. Pershing Square began investing in Borders in 2006.

Borders has suffered from a years-long sales decline and will only open its electronic bookstore next month, putting it far behind its bigger rival Barnes & Noble Inc (BKS.N) and online retailer Inc (AMZN.O) in grabbing a share of the fast growing e-books market.

In March, Borders repaid a $42.5 million loan to Pershing Square and secured access to more credit, winning much needed breathing room.

In its most recent quarter, which included the holiday season, sales at its namesake superstores open at least one year, fell 14 percent, the latest in a string of sales declines.

    Earlier this year, Ackman suggested Borders could end up in a booksellers’ consolidation with Barnes & Noble and reaffirmed that view on Thursday.

    “We’ve made the argument for some time that probably there should be one (chain) instead of two but that can only happen with the consent of both parties,” he said.

    Still, Ackman held out hope that Borders could find its way out of its problems, given that “it’s got a brand -- smart, well educated, higher income people coming into the store.”

    “If done correctly, there’s an opportunity,” he said.

    (Reporting by Phil Wahba; Editing by Dhara Ranasinghe)

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