Recycled Paper Greetings to be sold to American Greetings via pre-packaged bankruptcy

By Caroline Salls

Pittsburgh, Dec. 30 - Recycled Paper Greetings, Inc. will make a pre-packaged Chapter 11 bankruptcy filing to complete the sale of the company to American Greetings Corp., according to an American Greetings news release.

The purchase price will include a combination of $54.7 million of new 7 3/8% notes due in 2016 and up to $18.4 million of cash, in addition to a $44.2 million investment previously made by American Greetings in July.

According to the release, Recycled Paper's pre-packaged plan of reorganization is supported by its secured creditors.

Trade creditors are expected to be paid in full under the plan.

Recycled Paper's Chapter 11 reorganization is expected to provide American Greetings with meaningful tax benefits compared to alternative acquisition structures, the release said.

American Greetings said the parties hope to complete the Chapter 11 reorganization by the end of American Greetings' first fiscal quarter.

According to a Recycled Paper Greetings news release, the sale will be subject to regulatory review before being finalized, and it marks the culmination of Recycled Paper's efforts to restructure its debt.

"The acquisition of Recycled Paper Greetings will be an excellent addition to our current product offering," American Greetings chief executive officer Zev Weiss said in the release.

"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."

American Greetings has also agreed to provide up to $10 million of debtor-in-possession financing to Recycled Paper Greetings.

"American Greetings has indicated they are purchasing RPG because they believe in our long-term growth potential based on the special consumer appeal of our products," Recycled Paper chief executive officer Jude Rake said in the Recycled Paper release.

"This acquisition is good news for our company on many fronts."

American Greetings has indicated it plans to operate Recycled Paper Greetings on a stand-alone basis, Recycled Paper said in its release.

"I am confident our new connection to American Greetings will accelerate the growth of RPG by building on the complementary strengths of our two companies," Recycled Paper's news release said.

Recycled Paper said American Greetings has indicated that Rake and Recycled Paper's senior management team will continue to lead the company, which will still be based in Chicago.

Recycled Paper Greetings is a Chicago-based greeting card company.

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