Business News
American Greetings Announces Plans to Acquire Recycled Paper Greetings
Wednesday 31. December 2008 - American Greetings Corporation (NYSE:AM) today announced it has reached an agreement to acquire Recycled Paper Greetings, Inc.
American Greetings has agreed to purchase Recycled Paper Greetings, Inc. (“Recycled Paper”). Recycled Paper is a Chicago-based preeminent creator and designer of humorous greeting cards with annual net sales of approximately $80 million. Recycled Paper’s humor cards are distributed primarily through mass retail partners, drug stores and specialty retail stores. The transaction is subject to various closing conditions including a Chapter 11 reorganization process being successfully completed for Recycled Paper and other closing conditions.
The agreement providing for the acquisition contemplates that the transaction will be effected pursuant to a so-called “pre-packaged” Chapter 11 reorganization. The reorganization plan is supported by Recycled Paper’s secured creditors. Trade creditors are expected to be paid in full under the plan. The parties hope to complete the Chapter 11 reorganization process by the end of American Greetings’ first fiscal quarter, although there can be no assurance that this will be the case. Consideration for the acquisition will include a combination of $ 54.7 million of new 7.375% notes due in 2016 and up to $18.4 million of cash in addition to the $44.2 million investment ($67.1 million of principal) previously made by American Greetings during July 2008. The anticipated Chapter 11 reorganization process of Recycled Paper is expected to provide American Greetings meaningful tax benefits compared to alternative acquisition structures. American Greetings has also agreed to provide up to $10 million Debtor in Possession (DIP) financing to Recycled Paper Greetings.
The acquisition of Recycled Paper enhances American Greetings’ humor and alternative greeting card offerings. American Greetings plans to continue to use the Recycled Paper Greetings name.
Chief Executive Officer Zev Weiss said, “The acquisition of Recycled Paper Greetings will be an excellent addition to our current product offering. This transaction will give American Greetings an enlarged product design capability and a compelling product offering that is expected to delight consumers and enhance productivity for our retail partners.”
Advisors to American Greetings for this transaction included Imperial Capital, LLC and Jones Day.