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American Greetings Announces Plans To Acquire Recycled Paper Greetings

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Fuseworks Media
Fuseworks Media
American Greetings Announces Plans To Acquire Recycled Paper Greetings

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.

About American Greetings Corporation For more than 100 years, American Greetings Corporation (NYSE: AM) has been a manufacturer and retailer of innovative social expression products that assist consumers in enhancing their relationships. The Company's major greeting card brands are American Greetings, Carlton Cards and Gibson, and other paper product offerings include DesignWare party goods, American Greetings and Plus Mark gift-wrap and boxed cards and Date Works calendars. American Greetings also has the largest collection of electronic greetings on the Web, including cards available at AmericanGreetings.com through AG Interactive, Inc., the Company's online division. AG Interactive also offers digital photo sharing and personal publishing at PhotoWorks.com and Webshots.com and a one-stop source for online graphics, animations, and more at Kiwee.com. In addition to its product lines, American Greetings also creates and licenses popular character brands through the American Greetings Properties group. Headquartered in Cleveland, Ohio, American Greetings generates annual revenue of approximately $1.8 billion, and its products can be found in retail outlets domestically and worldwide, including Company-owned American Greetings and Carlton Cards stores. For more information on the Company, visit http://corporate.americangreetings.com.

Certain statements in this release may constitute forward-looking statements within the meaning of the Federal securities laws. These statements can be identified by the fact that they do not relate strictly to historic or current facts. They use such words as ``anticipate'', ``estimate'', ``expect'', ``project'', ``intend'', ``plan'', ``believe'', and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. These forward-looking statements are based on currently available information, but are subject to a variety of uncertainties, unknown risks and other factors concerning the Company's operations and business environment, which are difficult to predict and may be beyond the control of the Company. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements, and that could adversely affect the Company's future financial performance, include, but are not limited to, the following:

-- a weak retail environment and general economic conditions; -- the ability to achieve the desired benefits associated with its cost reduction efforts; -- the ability to close the acquisition of Recycled Paper, including, if we are unable to acquire Recycled Paper, whether we will be repaid our recent investment in its first-lien distressed debt securities; -- retail consolidations, acquisitions and bankruptcies, including the possibility of resulting adverse changes to retail contract terms; -- competitive terms of sale offered to customers; -- if the Company determines additional retail store closures are necessary; -- the timing and impact of investments in new retail or product strategies as well as new product introductions and achieving the desired benefits from those investments; -- consumer acceptance of products as priced and marketed; -- the ability to successfully integrate acquisitions, including Recycled Paper; -- the impact of technology on core product sales; -- the timing and impact of converting customers to a scan-based trading model; -- escalation in the cost of providing employee health care; -- the ability to identify, complete, or achieve the desired benefits associated with productivity improvement projects; -- the ability to successfully implement, or achieve the desired benefits associated with any information systems refresh the Company may implement; -- whether the Company executes share repurchase programs or the ability to achieve the desired accretive effect from any such share repurchases; -- the Company's ability to comply with its debt covenants; -- the Company's ability to successfully complete, or achieve the desired benefits associated with, dispositions, including the sale of the Strawberry Shortcake and Care Bears properties; -- fluctuations in the value of currencies in major areas where the Company operates, including the U.S. Dollar, Euro, U.K. Pound Sterling, and Canadian Dollar; and -- the outcome of any legal claims known or unknown.

Risks pertaining specifically to AG Interactive include the viability of online advertising, subscriptions as revenue generators, the public's acceptance of online greetings and other social expression products, and the ability to gain a leadership position in the digital photo sharing space.

In addition, this release contains time-sensitive information that reflects management's best analysis as of the date of this release. American Greetings does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release. Further information concerning issues that could materially affect financial performance related to forward-looking statements can be found in the Company's periodic filings with the Securities and Exchange Commission, including the ``Risk Factors'' section of the Company's Annual Report on Form 10-K for the fiscal year ended February 29, 2008.

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