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American Greetings wins Clinton Cards

by Laura Board | Published June 8, 2012 at 3:32 PM

American Greetings Corp. won a bankruptcy auction Thursday to buy a slimmed-down Clinton Cards plc comprising 397 stores that last year generated revenue of £212 million ($329.8 million).

The agreement, which will preserve 4,500 jobs, comes less than a month after Loughton, England-based Clinton Cards entered bankruptcy. Proceedings were initiated by the company's chief supplier, American Greetings of Cleveland, when it bought a £35 million loan from Barclays plc and Royal Bank of Scotland Group plc.

American Greetings said it had made a $37 million credit bid and expects the remaining $19 million in senior secured debt it holds in Clinton Cards to be substantially repaid through the liquidation proceeds of Clinton Cards' remaining assets within six to 12 months.

American Greetings CEO Zev Weiss said his company had lined up a leadership team for its new U.K. offshoot that has "extensive specialty retail channel experience."

"As mentioned before, we believe that properly managed, and with the appropriate capital structure, Clinton Cards can be both an important and profitable retailer in the specialty channel of distribution over the long term," he said in a statement.

On May 16 Zolfo Cooper partners Peter Saville, Simon Freakley and Anne O'Keefe said they would close 350 of Clinton Cards' 784 stores, including the entire 150-strong Birthdays Ltd. chain, which Clinton itself put into administration in 2009 before buying back some of the stores.

Zolfo Cooper, a restructuring firm, said the estate being bought by American Greetings "supports a viable business and is significantly better placed to operate in today's challenging market."

Zolfo Cooper's Saville said the administrators had had a "significant number of credible expressions of interest" from potential trade and financial buyers. The company has never disclosed the identities of rival bidders, but turnaround investor OpCapita LLP, discount retailer Card Factory Ltd., and books, stationary and newspapers chain WH Smith plc were reported to be interested.

"We have always been of the view that despite an intensely competitive retail environment and what proved to be excessively ambitious expansion plans in recent years, there was a strong underlying business contained within Clinton Cards," Saville said.

The administrators said they would now focus on the stores earmarked for closure and would welcome expressions of interest for all or part of that estate.

A Jones Day team including Corinne Ball, John Phillips, Michael Rutstein, Andrew Rotenberg, Chris Papanicolaou and Simon Kiff advised American Greetings on the Clinton Cards purchase, as well as on last month's purchase of Clinton Cards debt from the retailer's banks.

Freshfields Bruckhaus Deringer LLP advised Zolfo Cooper.

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