PRN: American Greetings Announces Acquisition Of Senior Secured Debt Of Clinton Cards PLC
American Greetings Announces Acquisition Of Senior Secured Debt Of Clinton Cards PLC
CLEVELAND, May 9, 2012 /PRNewswire/ -- American Greetings Corporation (NYSE: AM) today announced that it has acquired all of the outstanding senior secured debt of Clinton Cards PLC ("Clinton Cards") for approximately $56 million (approximately 35 million pounds Sterling) through a subsidiary in the United Kingdom ("UK").
Clinton Cards, one of the largest specialty retailers of greetings cards in the UK, has approximately 750 stores and annual revenues of approximately $600 million (approximately 364Â million poundsÂ excluding VAT) across its two primary retail brands, Clinton Cards and Birthdays. The legacy Clinton Cards business has been an important customer to American Greetings' international business for approximately forty years, and is one of American Greetings' largest customers.
Separate from the recently acquired senior secured debt, American Greetings has approximately $25 million of unsecured exposure to Clinton Cards, a majority of which is now in default. There have been repeated discussions with Clinton Cards since September 2011 concerning issues with our on-going supplies to it. Despite this, Clinton Cards has defaulted in respect of numerous payment obligations under our supply arrangements and we have recently stopped shipping product to Clinton Cards. In light of its financial distress, we believe that other suppliers have also recently stopped shipping product to Clinton Cards. As a result of its failure to pay amounts owed to us, together with the current state of its business, we expect that a portion of our unsecured exposure from Clinton Cards may be impaired.
After extensive discussions with Clinton Cards' management, board, and financial and legal advisors, on May 9, 2012, Clinton Cards invited American Greetings to place its business into administration, a procedure broadly similar to Chapter 11 bankruptcy in the United States, which gives the company (under the control of its administrators) an opportunity to restructure its business.
Chief Executive Officer Zev Weiss said, "We would like to see Clinton Cards continue as an important retailer in the specialty channel of distribution in the UK greeting card market. We expect that our recent investment will allow us to work closely with the administrators while they consider Clinton Card's restructuring options. As secured lender, we are better positioned to assist in identifying and obtaining the best possible solution for Clinton Cards, where we may ultimately participate in the ownership of the business or may continue as a supplier to any buyer of the business. We believe that properly managed, and with the appropriate capital structure, Clinton Cards could be both an important and profitable retailer in the specialty channel of distribution over the long term."
About American Greetings Corporation
Factors That May Affect Future Results
In addition, this release contains time-sensitive information that reflects management's best analysis as of the date of this release; however the risks and uncertainties identified above are not the only risks the Company faces.Â Additional risks and uncertainties not presently known to the Company or that the Company believes to be immaterial also may adversely affect American Greetings.Â Should any known or unknown risks or uncertainties develop into actual events, or underlying assumptions prove inaccurate, these developments could have a material adverse effect on our business, financial condition and results of operations.Â 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.Â Further information concerning issues that could materially affect 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, 2012.
Company Codes: NYSE:AM