If Borders Group does not have a deal to sell itself by next Wednesday, the company will give its single-largest shareholder, Pershing Square Capital Management, 5.15 million warrants to buy Borders common stock that will further increase the hedge fund's control of Borders, the Wall Street Journal reminded us today.

Borders would also have to issue the warrants if it takes itself off the market or if it sells its Paperchase stationery subsidiary to Pershing Square before January 15.

The warrants were part of a deal reached earlier this year whereby Borders borrowed $42.5 million from Pershing Square (Shelf Awareness, March 20, 2008).

The Journal wrote: "Borders had hoped to have a deal in place by the end of the month, but the market turmoil and growing uncertainty about the retail sector have all but dashed those hopes, according to one person close to the company."

Pershing Square is likely to obtain the warrants, which price the company's shares at $7 each, roughly its current price. As a result, Pershing Square and its head, William Ackman, would "benefit even more from a sale and may begin to exert pressure on Borders to secure a transaction quickly," the Journal speculated.