NEW YORK ( TheStreet) -- Borders ( BGP) is surging Tuesday afternoon following the news that the company will sell off its stationery unit and will use the proceeds to pay off debt.

Borders said Primary Capital, a British private-equity group, agreed to buy Paperchase Products for $31 million. The book retailer will then use $25 million of that to pay down its $90 million term loan credit facility.

The announcement comes after Borders launched its own e-bookstore last week to catch up to rivals Barnes & Noble ( BKS) and Amazon ( AMZN).

Shares of Borders are gaining 11% to $1.63 in afternoon trading.

-- Reported by Jeanine Poggi in New York.

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