Borders' attempt to "revitalise, refocus and reinvent" its bookselling business has been stopped in its tracks after the company was forced to pull a $250 million (£127 million) bond issue after just one day based on "shareholder feedback".

The company, which owns the Books etc chain in the UK, announced the convertible bond issue on April 3, along with an additional $37 million bond to cope with demand. However, the following day, Borders said it had changed its mind, based on shareholder reaction to the deal.

The group was going to use the proceeds of the issue to pay down a senior debt facility, and was putting in place a complex hedging structure aimed at protecting shareholders' investment against dilution if the convertible bond switched into equity.

The rejection by shareholders of the fundraising exercise is a blow to Borders which last month announced a wide-sweeping review of its business, including its international arm, raising the prospect of a sale of its Books etc chain worth about £50 million.

Borders announced that it was concentrating on turning around its US operations, and it was not in a position to inject the capital its UK business needed to expand.

Books etc spans 42 large stores and 30 smaller outlets in the UK, and employs 2,000 people.

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