American Greetings outlines details of Recycled Paper stock sale bid

By Caroline Salls

Pittsburgh, Jan. 6 - Recycled Paper Greetings, Inc. has entered into an agreement with American Greetings Corp. and subsidiary Lakeshore Trading Co. in connection with the proposed acquisition of all of the outstanding stock of RPG Holdings, Inc., according to an 8-K filed Tuesday with the Securities and Exchange Commission.

The stock sale will be completed through Recycled Paper's pre-packaged Chapter 11 plan of reorganization.

Specifically, American Greetings has agreed to buy all of the RPG stock in exchange for $12.4 million in cash, plus up to $6 million for unpaid professional fees and other amounts; the $67.1 million in principal amount of first-lien debt held by American Greetings, which it purchased for $44.2 million; $22 million in principal amount of American Greetings' 7 3/8% senior unsecured notes due June 1, 2016; and $32.7 million in principal amount of new American Greetings 7 3/8% notes.

American Greetings said the new notes will be issued on essentially the same terms as the existing notes, except that they will be subordinated to American Greetings' secured credit facility.

The sale consideration will be delivered to Recycled Paper for distribution to its secured creditors.

According to the 8-K, the stock sale is subject to plan confirmation.

After the sale is complete, reorganized RPG Holdings, Inc. and its subsidiaries will be wholly owned subsidiaries of American Greetings and any funded debt owed by Recycled Paper will no longer remain outstanding.

In addition, American Greetings, Lakeshore Trading and the holders of Recycled Paper's first-lien and second-lien debt have entered into an undertaking, under which the debtholders have agreed to support and vote in favor of Recycled Paper's plan.

Recycled Paper Greetings, a Chicago-based greeting card company, made a pre-packaged bankruptcy filing on Jan. 2 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 09-10002.

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