Bennett Lebow

Borders seems to have dodged the bullet — again, sorta. With payback deadlines looming, the company yesterday announced (in this release) that “it will hold a special shareholder meeting” in September to vote on a proposal to let Bennett S. LeBow “acquire 35.1 million shares of the company’s common stock at a price of $2.25 per share.” LeBow, the corporate raider who made his money in the cigarette business (and his name by admitting then denying cigarettes were linked to cancer), now owns the biggest chunk of the company and acts as its CEO. He essentially kept Borders from going bankrupt in May when he invested $25 million in the company in return for 11,111,111 shares.

Perhaps more importantly for LeBow, the new proposal would also grant his LeBow Gamma Limited Partnership full approval over “appointing, terminating or transferring the Chief Executive Officer or Chief Financial Officer of the company, or any executive officer, or materially changing the terms and conditions of their employment, subject to certain exceptions.”

As a report at AnnArbor.com by Nathan Bromey observes, the terms were part of the deal struck with Lebow in May when he made his $25 million investment.

As Bromey notes, however, LeBow’s “positioning himself to gain more control of the Ann Arbor-based book store chain” does not necessarily bode well for the company: “Borders, which is struggling to return to profitability, faces a tenuous long-term future as an independent retailer.”