Borders said in a statement that the move is part of its long-term plan to become more efficient and cut costs; the company determined that it had extra distribution capacity.
The two remaining distribution centers - in Carlisle, Pa., and Mira Loma, Calif. - will absorb the Tennessee center's functions, Borders said. The centers process and ship inventory to stores.
Company spokeswoman Mary Davis said in an e-mail that the company's strategic focus remains on refinancing its debt, which "is in the best interest of Borders, our vendors and our customers."
She declined to comment on media reports that a meeting with the company's vendors was planned for Thursday. Borders said last month that it had delayed payments to some of its vendors in order to preserve cash while it struggles to refinance its debt.
"Borders has notified these vendors and will be working with them to restructure their arrangements with the company," the company said Wednesday.
The company said the absence of refinancing could lead it to violate its credit agreements.
Borders said the distribution center's closing is not related to the refinancing effort or the delayed payments.
Workers at the center learned of the decision Wednesday morning. They will be offered a severance package.
Shares in Borders Group lost 5 cents, or 6 percent, to close Wednesday at 81 cents.
