Bookstores struggling Downunder

While publishers -- Random House in particular -- seem to be breasting difficult economic currents, the story for Australasian booksellers is still murky. The plot thickens in the Whitcoulls story, for instance.

Redgroup Retail, the owner of the Whitcoulls and Borders book stores Downunder, has bargained for a waiver for breaches to its banking covenants.

The book, stationery and entertainment company, based in Melbourne, is exploring a range of options to strengthen its long-term balance sheet.

Last month the company forecast earnings before interest, tax, depreciation and so forth of about $25 million for the 12 months ended August 28, 2010, against which interest payments of approximately $9 million were due, which would have put it in breach of two out of three banking covenants.

It cited a tough trading environment, particularly in Australia, in the last quarter of its financial year.

Chairman Rod Walker, who led the company as executive chairman after its acquisition of the Borders book store chain, will step down, and Joe Browne, finance director of electronics manufacturer Startronics, will take over as a non-executive director.