Book retailer Borders has effectively put itself up for sale after becoming the latest victim of the global credit crisis.

Borders Group, which owns 1,100 shops around the world, has appointed JP Morgan and Merrill Lynch to "explore strategic alternatives" after running out of ways to raise fresh funding.

The phrase is banker speak for hoisting the "for sale" sign, with the two investment banks most likely retained to find the highest bidder. In addition, Borders has suspended its quarterly dividend programme, and has agreed a short-term funding line commitment from hedge fund Pershing Square.

The bulk of Borders' stake in its British arm was sold to Luke Johnson's private equity house Risk Capital Partners last September for an initial £10m fee and a further £10m depending on future performance.

Borders chief executive George Jones said the retailer had explored various funding options, but that "the current credit environment has made many of these alternatives prohibitively expensive or entirely unavailable."

The book retailer has been hit by the increasing popularity of online book sellers such as Amazon and Play.com, and also by the weakening consumer economy, with shoppers having less money in their wallets and purses to buy books, magazines and music.

Full-year results from Borders released at the same time as news of the strategic review show that Borders recorded a net loss of $157.4m in the year to February 2, on top of $151.3m of losses the prior year. Part of the loss came from a one-off $125.7m post-tax loss on the sale of its majority stake in Borders UK.

Shares in Borders have slumped from highs of $23.41 last May to $5.39, valuing the business at $313m.