Nebraska Book Co., one of the largest college bookstore operators, has filed for bankruptcy protection in Delaware to restructure its debt. The Lincoln, NE-based company operates about 280 bookstores on or near college campuses and is a large wholesaler of textbooks.
NBC had $657.2 million of assets and $564 million of debts as of February 14, according to a petition filed last week with the U.S. Bankruptcy Court.


The filing said sales have been on the decline as more customers shop online.


But Nebraska Book reached an agreement on a restructuring with the support of more than 95 percent of the holders of its 8.625 percent senior subordinated notes and more than 75 percent of its 11 percent discount noteholders. The company said in a statement it will restructure about $450 million in loans and bonds of its parent, NBC Acquisition Corp., and affiliates.


In a court filing, CFO Alan Siemek said several years of declining or stagnant earnings left NBC unable to refinance debt maturing in 2011 and 2012.


NBC has proposed a restructuring that would turn control of the company over to noteholders, court papers show.


Under the proposal, $175 million in 8.625 million senior subordinated notes would be converted into $30.6 million in secured notes, $120 million in unsecured notes and 78 percent of the new equity, according to court filings. Holders of the $77 million in 11 percent discount notes would receive the remaining 22 percent of the stock.


Secured lenders, owed about $26.3 million, and secured noteholders, owed about $200 million, would be paid in full with cash.


As part of a pre-bankruptcy plan, Nebraska Book said most holders of two debt issues agreed on a restructuring for $450 million of its loans and bonds, eliminating up to $77 million of debt at the parent level. It also lined up $200 million of financing to keep operating in bankruptcy.
NBC lost $98 million in its latest fiscal year, mainly because of a goodwill write-down, on revenue of $598 million.


The company has more than $20 million of cash on hand, and has commitments for a $200 million loan to help fund operations while in bankruptcy, according to court documents.