SC 13D/A

0000950123-09-000857.txt : 20090120 0000950123-09-000857.hdr.sgml : 20090119 20090120162236 ACCESSION NUMBER: 0000950123-09-000857 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20090120 DATE AS OF CHANGE: 20090120 GROUP MEMBERS: BGP HOLDINGS CORP. GROUP MEMBERS: PERSHING SQUARE GP, LLC GROUP MEMBERS: PS MANAGEMENT GP, LLC GROUP MEMBERS: WILLIAM A. ACKMAN SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BORDERS GROUP INC CENTRAL INDEX KEY: 0000940510 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS SHOPPING GOODS STORES [5940] IRS NUMBER: 383294588 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-52269 FILM NUMBER: 09534463 BUSINESS ADDRESS: STREET 1: 100 PHOENIX DRIVE CITY: ANN ARBOR STATE: MI ZIP: 48108 BUSINESS PHONE: (734) 477-1100 MAIL ADDRESS: STREET 1: 100 PHOENIX DRIVE CITY: ANN ARBOR STATE: MI ZIP: 48108 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Pershing Square Capital Management, L.P. CENTRAL INDEX KEY: 0001336528 IRS NUMBER: 383694136 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 888 SEVENTH AVENUE STREET 2: 29TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 212-813-3700 MAIL ADDRESS: STREET 1: 888 SEVENTH AVENUE STREET 2: 29TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 SC 13D/A 1 y00957sc13dza.htm AMENDMENT TO SCHEDULE 13D SC 13D/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 9)*

Borders Group, Inc.

(Name of Issuer)

Common Stock
(Title of Class of Securities)

099709107
(CUSIP Number)

Roy J. Katzovicz, Esq.
Pershing Square Capital Management, L.P.
888 Seventh Avenue, 42^nd Floor
New York, New York 10019
212-813-3700
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)

with copies to:

Andrew G Dietderich, Esq.
Alan J. Sinsheimer, Esq.
Sullivan & Cromwell LLP
125 Broad Street, New York, New York 10004
212-558-4000

January 16, 2009
(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for other parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


CUSIP No.		099709107

NAME OF REPORTING PERSON

Pershing Square Capital Management, L.P.

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)

(a) o

(b) þ

SEC USE ONLY

SOURCE OF FUNDS (SEE INSTRUCTIONS)

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware

SOLE VOTING POWER

NUMBER OF

-- 0 --

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

25,297,880

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

-- 0 --

WITH

SHARED DISPOSITIVE POWER

25,297,880

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

25,297,880

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

33.62%¹

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)


¹		This calculation is based on 75,238,934 shares of common stock of Borders Group, Inc. This figure is based on 60,538,934 shares of Common Stock outstanding as of December 5, 2008 as reported in its quarterly report on Form 10-Q for the quarterly period ended November 1, 2008 and warrants covering 14,700,000 shares of Common Stock.


CUSIP No.		099709107

NAME OF REPORTING PERSON

PS Management GP, LLC

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)

(a) o

(b) þ

SEC USE ONLY

SOURCE OF FUNDS (SEE INSTRUCTIONS)

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware

SOLE VOTING POWER

NUMBER OF

-- 0 --

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

25,297,880

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

-- 0 --

WITH

SHARED DISPOSITIVE POWER

25,297,880

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

25,297,880

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

33.62%²

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)


²		This calculation is based on 75,238,934 shares of common stock of Borders Group, Inc. This figure is based on 60,538,934 shares of Common Stock outstanding as of December 5, 2008 as reported in its quarterly report on Form 10-Q for the quarterly period ended November 1, 2008 and warrants covering 14,700,000 shares of Common Stock.


CUSIP No.		099709107

NAMES OF REPORTING PERSON

Pershing Square GP, LLC

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)

(a) o

(b) þ

SEC USE ONLY

SOURCE OF FUNDS (SEE INSTRUCTIONS)

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware

SOLE VOTING POWER

NUMBER OF

-- 0 --

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

14,779,433

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

-- 0 --

WITH

SHARED DISPOSITIVE POWER

14,779,433

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

14,779,433

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

19.64%³

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)


³		This calculation is based on 75,238,934 shares of common stock of Borders Group, Inc. This figure is based on 60,538,934 shares of Common Stock outstanding as of December 5, 2008 as reported in its quarterly report on Form 10-Q for the quarterly period ended November 1, 2008 and warrants covering 14,700,000 shares of Common Stock.


CUSIP No.		099709107

NAME OF REPORTING PERSON

William A. Ackman

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)

(a) o

(b) þ

SEC USE ONLY

SOURCE OF FUNDS (SEE INSTRUCTIONS)

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

CITIZENSHIP OR PLACE OF ORGANIZATION

U.S.A.

SOLE VOTING POWER

NUMBER OF

-- 0 --

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

25,297,880

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

-- 0 --

WITH

SHARED DISPOSITIVE POWER

25,297,880

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

25,297,880

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

33.62%⁴

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)


⁴		This calculation is based on 75,238,934 shares of common stock of Borders Group, Inc. This figure is based on 60,538,934 shares of Common Stock outstanding as of December 5, 2008 as reported in its quarterly report on Form 10-Q for the quarterly period ended November 1, 2008 and warrants covering 14,700,000 shares of Common Stock.


CUSIP No.		099709107

NAME OF REPORTING PERSON

BGP Holdings Corp.

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)

(a) o

(b) þ

SEC USE ONLY

SOURCE OF FUNDS (SEE INSTRUCTIONS)

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware

SOLE VOTING POWER

NUMBER OF

-- 0 --

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

8,798,000

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

-- 0 --

WITH

SHARED DISPOSITIVE POWER

8,798,000

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

8,798,000

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

11.69%⁴

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)


⁴		This calculation is based on 75,238,934 shares of common stock of Borders Group, Inc. This figure is based on 60,538,934 shares of Common Stock outstanding as of December 5, 2008 as reported in its quarterly report on Form 10-Q for the quarterly period ended November 1, 2008 and warrants covering 14,700,000 shares of Common Stock.

This Amendment No. 9 (this “Amendment No. 9”) amends and supplements the statement on Schedule 13D, as amended to date (the “Schedule 13D”), by (i) Pershing Square Capital Management, L.P., a Delaware limited partnership (“Pershing Square”), (ii) PS Management GP, LLC, a Delaware limited liability company (“PS Management”), (iii) Pershing Square GP, LLC, a Delaware limited liability company (“Pershing Square GP”), (iv) William A. Ackman, a citizen of the United States of America and (v) BGP Holdings Corp., a Delaware corporation (collectively, the “Reporting Persons”), relating to the common stock (the “Common Stock”) of Borders Group, Inc., a Michigan corporation (the “Issuer”). Unless otherwise defined herein, capitalized terms used herein shall have such defined meanings as previously used in the Schedule 13D filed by the Reporting Persons.

As of January 16, 2009, as reflected in this Amendment No. 9, the Reporting Persons are reporting beneficial ownership on an aggregate basis of 25,297,880 shares of Common Stock (approximately 33.62% of the outstanding shares). This includes warrants covering 14,700,000 shares of Common Stock, which represents 9,550,000 warrants received on April 9, 2008 and 5,150,000 warrants received on October 1, 2008 (each, as previously disclosed). The Reporting Persons own cash settled, total return equity swaps covering 4,805,463 notional shares of Common Stock (as previously disclosed). The notional shares that underlie such swaps are not included in the totals set forth in the charts earlier in the Schedule 13D. The aggregate economic exposure of the Reporting Persons to shares of Common Stock, including the aggregate shares of Common Stock beneficially owned by the Reporting Persons plus the aggregate notional shares underlying such swaps, represents approximately 40% of the sum of the outstanding shares of Common Stock and the shares of Common Stock underlying such warrants.

Item 4. Purpose of Transaction

Item 4 is hereby supplemented, as follows:

On December 22, 2008, Pershing Square, certain of its affiliates and the Issuer entered into an agreement (the “First Amendment to the Senior Secured Credit Agreement”) to extend the deadline for repayment of the $42,500,000 senior secured term loan owed under the Credit Agreement by the Issuer to Pershing Square, from January 15, 2009 to February 16, 2009.

On December 22, 2008, Pershing Square and the Issuer entered into an agreement (the “Extension of Purchase Offer”) to extend Pershing Square’s backstop purchase offer on behalf of certain funds managed by Pershing Square, set forth in the Purchase Offer Letter, from January 15, 2009 to February 16, 2009. On January 16, 2009, Pershing Square and the Issuer further agreed to amend the Purchase Offer Letter (the “Amendment of Purchase Offer”), such that at the election of the Issuer and subject to certain terms and conditions, certain funds managed by Pershing Square will be obligated to purchase all, but not less than all, of the issued and outstanding capital stock of Paperchase Products Ltd. and its subsidiaries (together, “Paperchase”). In advance of the acquisition of Paperchase, the Issuer (or certain of its affiliates) will either acquire any issued and outstanding capital stock of Paperchase currently not owned by the Issuer (or certain of its affiliates), or cause any third party holders that own capital stock of Paperchase to become parties to the stock purchase agreement for the sale of Paperchase to certain funds managed by Pershing Square. Pursuant to the terms of the Purchase Offer Letter, as amended by the Amendment of Purchase Offer, funds managed by Pershing Square are no longer obligated to purchase the Issuer’s approximately 17% interest in Bookshop Acquisitions, Inc. The Purchase Offer Letter remains subject to its original terms and conditions, except as expressly amended or modified by the Amendment of Purchase Offer.

The foregoing summary of the First Amendment to the Senior Secured Credit Agreement, the Extension of Purchase Offer, the Amendment of Purchase Offer and the transactions contemplated thereby is not complete and is subject in its entirety to the First Amendment to the Senior Secured Credit Agreement, the Extension of Purchase Offer and the Amendment of Purchase Offer, which are filed as Exhibits 99.1, 99.2 and 99.3 hereto and are incorporated herein by reference.

The Reporting persons have been and continue to be in discussions with the Issuer regarding financing transactions, including the backstop purchase offer, set forth in the Purchase Offer Letter, as extended and amended pursuant to the Extension of Purchase Offer and the Amendment of Purchase Offer, and alternative commitments and transactions (collectively, “Financing Transactions”). Notwithstanding anything to the contrary in this Schedule 13D or otherwise, the Reporting Persons may cease these discussions at any time and can make no assurance that any Financing Transaction will be successfully negotiated and/or consummated.

Item 5. Interest in Securities of the Issuer

Item 5(c) is hereby supplemented, as follows:

On December 3, 2008, Pershing Square GP sold for the account of Pershing Square, L.P. (a limited partnership of which Pershing Square GP is the general partner) 5,257,659 shares of Common Stock at $0.68 per share to the account of Pershing Square International, Ltd.

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer

Item 6 is hereby supplemented, as follows:

On December 22, 2008, Pershing Square, certain of its affiliates and the Issuer entered into the First Amendment to the Senior Secured Credit Agreement, which is filed as Exhibit 99.1 hereto and is incorporated herein by reference.

On December 22, 2008, Pershing Square and the Issuer entered into the Extension of Purchase Offer, which is filed as Exhibit 99.2 hereto and is incorporated herein by reference.

On January 16, 2009, Pershing Square and the Issuer entered into the Amendment of Purchase Offer, which is filed as Exhibit 99.3 hereto and is incorporated herein by reference.

Item 7. Material to be Filed as Exhibits

Item 7 is hereby supplemented by adding the following exhibits:


Exhibit 99.1		First Amendment to the Senior Secured Credit Agreement, dated December 22, 2008, among the Issuer, the guarantors named therein, the lenders named therein and Pershing Square Capital Management, L.P., as administrative agent and collateral agent.

Exhibit 99.2		Extension of Purchase Offer, dated December 22, 2008, between Pershing Square Capital Management, L.P. and the Issuer.

Exhibit 99.3		Amendment of Purchase Offer, dated January 16, 2009, between Pershing Square Capital Management, L.P. and the Issuer.

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete, and correct.


Date: January 20, 2009	PERSHING SQUARE CAPITAL MANAGEMENT, L.P. PS Management GP, LLC,
	By:	its General Partner

	By:	/s/ William A. Ackman
		William A. Ackman
		Managing Member

	PS MANAGEMENT GP, LLC
	By:	/s/ William A. Ackman
		William A. Ackman
		Managing Member

	PERSHING SQUARE GP, LLC
	By:	/s/ William A. Ackman
		William A. Ackman
		Managing Member


	/s/ William A. Ackman
	William A. Ackman


	BGP HOLDINGS CORP.
	By:	/s/ William A. Ackman
		William A. Ackman
		Authorized Representative

EX-99.1 2 y00957exv99w1.htm EX-99.1: FIRST AMENDMENT TO THE SENIOR SECURED CREDIT AGREEMENT EX-99.1

FIRST AMENDMENT TO THE SENIOR SECURED CREDIT AGREEMENT, dated as of December 22, 2008 (this “Amendment”), made by and among (a) Borders Group, Inc., a Michigan corporation (the “Borrower”), (b) Pershing Square Credit Partners LLC, a Delaware limited liability company (“Pershing Square” or a “Lender), (c) PSRH, Inc., a Cayman Islands exempted company (a “Lender”, and collectively with Pershing Square, the “Lenders”), and (d) Pershing Square Capital Management, L.P., a Delaware limited partnership (the “Collateral Agent” and the “Administrative Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Credit Agreement (as hereinafter defined).

RECITALS

WHEREAS, the Borrower, the Lenders, the Collateral Agent, the Administrative Agent and certain other parties entered into that certain Senior Secured Credit Agreement, dated as of April 9, 2008 (the “Credit Agreement”);

WHEREAS, the Borrower, the Lenders, the Collateral Agent and the Administrative Agent desire to amend the Credit Agreement in accordance with Section 14.12 of the Credit Agreement in the manner set forth in this Amendment in order to extend the Maturity Date until February 16, 2009;

NOW, THEREFORE, in order to carry out their intent as expressed above and in consideration of the mutual agreements hereinafter contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

Section 1.1 of the Credit Agreement is hereby amended by deleting the definitions of “Administrative Agent’s Office” and “Maturity Date” and replacing them in their entirety with the following new definitions, as applicable:

			“Administrative Agent’s Office. The Administrative Agent’s office located at 888 Seventh Avenue, 42^nd Floor, New York, NY 10019 or at such other location as the Administrative Agent may designate from time to time.”

			“Maturity Date. February 16, 2009.”

Section 2.2.2 of the Credit Agreement is hereby amended by replacing it in its entirety with the following new provision:

“Repayment Premium. The Borrower agrees to pay to Pershing Square Capital for the account of the Lenders (i) an amount in Dollars equal to 2.25% of any principal amount of Loans repaid between the date hereof until January 15, 2009, on the date of any such repayment, and (ii) on January 15, 2009, an amount in Dollars equal to 2.25% of the principal amount of Loans then outstanding (together, (i) and (ii) shall constitute the “Repayment Premium”). Payment of the Repayment Premium shall be a condition to (i) the extension of the Maturity Date from January 15, 2009 to February 16, 2009, and (ii) the effectiveness of the repayment of the principal amount of the Loans.”

3.		Section 3.1 of the Credit Agreement is hereby amended by deleting the words “and, as a condition to the effectiveness of such payment, the Repayment Premium” therefrom.

4.		Section 3.2 of the Credit Agreement is hereby amended by deleting the “.” at the end thereof and replacing it with the following: “, if applicable.”

5.		Section 3.3 of the Credit Agreement is hereby amended by deleting the “.” at the end thereof and replacing it with the following: “, if applicable.”

6.		References in Sections 14.6 (b) and (c) of the Credit Agreement to “29^th Floor” shall be amended and restated to read “42^nd Floor.”

7.		References in the Credit Agreement to “this Credit Agreement” or any particular Section thereof shall be deemed to refer to the Credit Agreement or such Section as amended hereby.

8.		Except as amended hereby, the Credit Agreement remains unmodified and is in full force and effect.

9.		This Amendment may be executed in two or more counterparts, each of which constitutes an original and all of which, when taken together, constitute one agreement. This Amendment may be delivered by facsimile and when executed and so delivered, shall be an original for all purposes.

10.		THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

BORROWER:


BORDERS GROUP, INC.
By:	/s/ Edward W. Wilhelm
	Name:	Edward W. Wilhelm
	Title:	Senior Vice President, Finance and Chief Financial Officer

LENDERS:


PERSHING SQUARE CREDIT PARTNERS LLC
By:	PERSHING SQUARE CAPITAL MANAGEMENT, L.P., its Managing Member

By:	PS MANAGEMENT GP, LLC, its General Partner

By:	/s/ William A. Ackman
	Name:	William A. Ackman
	Title:	Managing Member



PSRH, INC.
By:	PERSHING SQUARE CAPITAL MANAGEMENT, L.P., its Authorized Representative

By:	PS MANAGEMENT GP, LLC, its General Partner

By:	/s/ William A. Ackman
	Name:	William A. Ackman
	Title:	Managing Member

ADMINISTRATIVE AGENT/COLLATERAL AGENT:


PERSHING SQUARE CAPITAL MANAGEMENT, L.P.
By:	PS MANAGEMENT GP, LLC, its General Partner

By:	/s/ William A. Ackman
	Name:	William A. Ackman
	Title:	Managing Member

EX-99.2 3 y00957exv99w2.htm EX-99.2: EXTENSION OF PURCHASE OFFER EX-99.2

December 22, 2008

Borders Group, Inc.
100 Phoenix Drive
Ann Arbor, MI 48108


Attention:		Mr. George L. Jones, President and Chief Executive Officer

EXTENSION OF PURCHASE OFFER

Ladies and Gentlemen:

Reference is made to our letter to you, dated as of April 9, 2008 (the “Purchase Offer Letter”). Capitalized terms used but not defined have the meanings specified in the Purchase Offer Letter.

This confirms your and our agreement that the Drop-Dead Date is hereby extended to February 16, 2009, or such later date as you and we may mutually agree in writing. Except as expressly modified hereby, all terms and conditions of the Purchase Offer Letter will remain in full force and effect.

This letter shall be governed by and construed in accordance with the laws of the State of New York.

[signatures on following page]


	Very truly yours, PERSHING SQUARE CAPITAL MANAGEMENT, L.P.
	By:	PS Management GP, LLC, its General Partner

	By:	/s/ William A. Ackman
	Name:	William A. Ackman, Managing Member

Agreed to and accepted this
22^nd day of December, 2008

BORDERS GROUP, INC.


By:	/s/ Edward W. Wilhelm
Name:	Edward W. Wilhelm
Title:	Senior Vice President, Finance and Chief Financial Officer

EX-99.3 4 y00957exv99w3.htm EX-99.3: AMENDMENT OF PURCHASE OFFER EX-99.3

January 16, 2009

Borders Group, Inc.
100 Phoenix Drive
Ann Arbor, MI 48108


Attention:		Mr. Ron Marshall, President and Chief Executive Officer

AMENDMENT OF PURCHASE OFFER

Ladies and Gentlemen:

Reference is made to our letter to you, dated as of April 9, 2008 as extended pursuant to our letter to you, dated as of December 22, 2008 (the “Purchase Offer Letter”). Capitalized terms used but not defined have the meanings specified in the Purchase Offer Letter.

The term “UK Business” referenced in the Purchase Offer Letter, is hereby revised and replaced in its entirety to consist of all, but not less than all, of the issued and outstanding capital stock of Paperchase Products Ltd. and its subsidiaries (together, “Paperchase”). For the avoidance of doubt, (i) the term “UK Business” shall not include Seller’s 17% interest in Bookshop Acquisition Ltd and (ii) the terms “Subject Businesses,” “Subject Companies” and “Acquired Companies” shall refer to the UK Business as defined in the immediately preceding sentence.

All references to Bookshop and Bookshop Acquisition, Ltd. in the Purchase Offer Letter, including without limitation section 8 and section 10 of the Purchase Offer Letter in their entirety, are hereby eliminated and void ab initio as of the date hereof.

The parties hereto agree to revise the form Stock Purchase Agreement attached as Exhibit A to the Purchase Offer Letter promptly prior to its execution and delivery in accordance with the provisions of the Purchase Offer Letter, so as to exclude

the sale of any capital stock of Bookshop Acquisition, Ltd. and include the sale of all of the issued and outstanding capital stock of Paperchase. For this purpose, the Seller shall, or shall cause the Second Seller and/or the Third Seller (each, as defined in the Stock Purchase Agreement) to, (i) acquire any issued and outstanding capital stock of Paperchase currently not owned by either the Seller, the Second Seller or the Third Seller, promptly prior to the execution and delivery of the Stock Purchase Agreement, or (ii) cause the owners of the issued and outstanding capital stock of Paperchase (other than the Seller, the Second Seller or the Third Seller) (each, an “Additional Party”) to become parties to the Stock Purchase Agreement. In the event that any Additional Party becomes a party to the Stock Purchase Agreement, the obligation of the Sellers (as defined in the Stock Purchase Agreement), pursuant to the provisions of the Stock Purchase Agreement, to indemnify the Purchaser Indemnified Parties (as defined in the Stock Purchase Agreement) shall be a joint and several obligation of all the Sellers and the Additional Parties.

For the avoidance of doubt, the Purchase Offer Letter shall remain in full force and effect in accordance with its original terms, except as expressly amended or modified by this letter agreement.

This letter agreement shall be governed by and construed in accordance with the laws of the State of New York.

[signatures on following page]

- 2 -

Very truly yours,

PERSHING SQUARE CAPITAL MANAGEMENT, L.P.

By: PS Management GP, LLC, its General Partner



By:	/s/ William A. Ackman
Name:		William A. Ackman, Managing Member

Agreed to and accepted this
16^th day of January, 2009

BORDERS GROUP, INC.



By: /s/ Mark Bierley
Name:	Mark Bierley
Title:	Executive Vice President and Chief Financial Officer

- 3 -

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