Textbook wholesale company NBC can’t get financing

As we previously reported Nebraska Book Company (NBC), a textbook wholesaler based out of Lincoln, Nebraska, filed for bankruptcy and hoped to obtain funding to allow it to emerge from court protection.  The JournalStar is reporting that NBC is having difficulty finding anyone to loan it the funds required to leave bankruptcy court protection.  NBC has been seeking up to $250 million required by the court approved reorganization planned scheduled for October 4th, 2011.

According to court filings the company said the following about its inability to find funding:

various macroeconomic indicators, including a tightening of capital markets, as possible concerns with the debtors’ procuring the exit financing at this time

How about just being out of touch with current trends towards finding cheap textbooks by buying textbooks online or with textbook rentals?  NBC officials chastised college students seeking anything other than high priced new textbooks from NBC as “value shoppers” – so they seem to be stating that anyone not wanting to pay their high-priced textbook store prices must a shopper they don’t want?  Pretty sure people will be happy to not hand over their hard earned money to NBC via any of the over 290 college bookstores it operates throughout the country.

Not surprisingly, potential lenders want to see how NBC recently performed during the recent textbook high season.  However, sales of books for August and September in it’s textbook stores will not be fully reported till later in October.  NBC said it can take several more weeks before it can “get behind” the numbers – sounds a little sketchy.

Apparently, the confirmation hearing has been pushed back to October 27th, 2011 to review the current plan which was to remove $150 million of debt from their balance sheet.  The plan involved exchanging current debt for new debt in the form of cash and new stock issuance once the first and second lien holders had been paid in full.  The stock would be divided amongst subordinated noteholders of the operating company and holders of notes by the holding company.

According to our industry contacts NBC was known as the dinosaur of the textbook supply market – very slow to adopt technological change and very hard to work with regarding any new ideas.  It would appear that their set ways is sending them the way of dinosaur as I doubt any potential lender that takes a serious look at the marketplace would want to invest in an antiquated company when MBS, SE Textbooks, or other companies could easily fulfill any void left by NBC.  There is certainly money to made with the college bookstores that NBC owns and operates if they adopt different practices, but with the bankruptcy of Borders the value of brick and mortar bookstores is certainly something question.