Borders Group Inc. (NYSE:BGP) reneged on its plans to sell $250 million in convertible bonds less than a day after it proposed the sale. The book retailer announced that it would "re-evaluate this and other financing alternatives" after a large shareholders supposedly raised objections because it would hurt existing shareholders. However, sources close to the situation say that the real reason is that more convertible debt could jeopardize a possible sale of the company.

Speculation of a sale come as the company unveiled a restructuring plan after reporting disappointing numbers for the year. As part of the plan, the company said it intends to sell or franchise most of its overseas stores and expedite teh closing of many Waldenbooks outlets throughout the U.S. Many analysts see this move to unload under performing businesses as a preliminary step ahead of a possible sale of the company. In fact, some investors have already been pushing for a sale of the company to its closest rival, Barnes & Noble (NYSE:BKS), after Bill Ackman's Pershing Square took big positions in both companies. While Barnes & Noble executives have dismissed these rumors, Ackman still holds a 12% stake in the company as of April 4th. Meanwhile, there has also been speculation that the private equity firms have been eyeing the company. Today's developments definitely give more merit to these rumors, however whether or not they are true remains to be seen. Regardless, this is definitely a stock to watch!

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