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 Borders has lost market share both to online companies and to Wal-Mart Stores Inc.
Borders Group Inc. said the financing commitment comes from investment funds affiliated with Pershing Square Capital Management LP, a major shareholder, and includes an offer to buy Borders' international businesses.
"We believe that consummation of the transactions under the commitment will make us fully funded for 2008, where absent these measures, liquidity issues may otherwise have arisen in the next few months," Borders CEO George Jones said in a statement.
Borders said it is reviewing a wide range of possibilities, including the sale of only part of the company or certain divisions.
After postponing its scheduled fourth-quarter earnings results Wednesday, the company reported net income of $64.7 million, or $1.10 a share, compared with a loss of $73.6 million, or $1.22, during the same period last year.
Revenue fell 2 percent to $1.35 billion, from $1.37 billion.
Analysts polled by Thomson Financial expected profits of $1.42 per share on sales of $1.37 billion.
Quarterly results included a $7 million loss from the sale of Irish and British businesses for $13 million.
In yet another sign of pressures on retailers nationwide, Borders suspended quarterly dividends, which it will plow into operations.
Last March, Borders said it wouldn't provide future sales or earnings guidance during a restructuring, but it said it anticipated returning to earnings per share growth in 2008. On Thursday, Jones said that may take a longer than expected.
"Overall, we believe that the 2009 financial targets we set back in March of last year remain attainable, yet within the current economic environment, we will be slowed in our progress," Jones said.
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 The sales agreement for international businesses announced Thursday gives Borders the option until Jan. 15 to require Pershing Square to pay $125 million for the international business, which includes Borders' Paperchase, Australia, New Zealand and Singapore subsidiaries. But Borders said it must pursue the sale of those operations first before any deal with Pershing.
"This will be a challenging year for retailers due to continued uncertainty in the economic environment," Jones said. "Looking forward to 2008 and beyond, the company determined that additional capital was required to execute our operating plan, and as a result we began to explore various financing options.
"The current credit environment has made many of these alternatives prohibitively expensive or entirely unavailable."
Borders group a year ago announced a restructuring that included a fresh face for its U.S. superstores and a jump back into online bookselling. Borders opened the first of its new concept stores last month near its headquarters, and has said its new Borders.com Web site was to make its debut shortly.
Ann Arbor-based Borders said J.P. Morgan Securities Inc. and Merrill Lynch & Co. have been retained as the company's financial advisers to assist the company as it explores strategic alternatives.
The company said it can give no assurances that a transaction of any kind will occur.
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On the Net:
Borders Group Inc.: http://www.bordersgroupinc.com/
[Associated Press; By DAVID RUNK]
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