Clinton Cards headed for administration; American Greetings buys debt

By Caroline Salls

Pittsburgh, May 9 - Clinton Cards plc invited American Greetings Corp. to place its business in administration on May 9, according to an American Greetings news release.

American Greetings also said it has acquired all of the outstanding senior secured debt of Clinton Cards for $56 million through a subsidiary in the United Kingdom.

According to the release, there have been repeated discussions with Clinton Cards since September 2011 concerning issues with American Greetings' ongoing supplies to Clinton Cards.

Despite this, American Greetings said Clinton Cards has defaulted on numerous payment obligations under the supply arrangements, and American Greetings has recently stopped shipping product to Clinton Cards.

American Greetings said it believes that other suppliers have also recently stopped shipping products to Clinton Cards in light of its financial distress.

As a result of its failure to pay amounts owed to American Greetings, together with the current state of its business, American Greetings said it expect that a portion of its unsecured exposure from Clinton Cards may be impaired.

"We would like to see Clinton Cards continue as an important retailer in the specialty channel of distribution in the U.K. greeting card market," American Greetings chief executive officer Zev Weiss said in the release.

"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."

American Greetings said Clinton Cards has roughly 750 stores and annual revenues of $600 million 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 40 years, and is one of American Greetings' largest customers, the release said.

Separate from the recently acquired senior secured debt, American Greetings said it has $25 million of unsecured exposure to Clinton Cards, a majority of which is now in default.

American Greetings is a Cleveland-based greeting card company. Clinton Cards is the U.K.'s largest specialty retailer of cards.

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