CLEVELAND-American Greetings Corp., a $1.7 billion company, has now entered the retail store business with the acquisition of most of Essex, England-based Clinton Cards PLC. The locally based firm will take over almost 400 of the Clinton stores, as another 350 of Clinton’s stores have already been closed due to bankruptcy.
American Greetings was one of Clinton’s biggest suppliers. However, the UK firm collapsed after being unable to pay back creditors, including American Greetings, which had purchased Clinton’s senior secured debt for about $56 million. American Greetings then bid about $37 million of the debt for the remaining Clinton open stores, which were deemed “viable, ongoing business” assets, according to a company statement.
The $19 million remaining may be paid from the remaining Clinton liquidation, though that process, expected to take up to a year, may not cover the debt. Also, the final number of stores that American Greetings acquires will be dependent on negotiations with landlords at each respective location.
Zev Weiss, American Greetings CEO, said in a statement that he is pleased to welcome Clinton’s 4,500 employees to his firm. “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,” Weiss said. “The separation of the acquired assets and business from the legal entity in administration is an important first step of this process. We have also lined-up a leadership team to run the new UK subsidiary that has extensive specialty retail channel experience."
Spokespeople for American Greetings did not respond to questions for comment, including on whether the firm will keep the Clinton name or whether there would be any reductions in employees. In the statement, the company said it will disclosed more information on the purchase in its first quarter earnings conference call on June 28.
On May 9, Peter Saville, Simon Freakley and Anne O’Keefe of Zolfo Cooper LLP were appointed as joint administrators of Clinton Cards. The affairs, business and property of the company are being managed by the joint administrators. The company was founded in 1968 by Don Lewin.
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