ANN ARBOR, Mich. Borders Group announced that the company has entered into an agreement to sell Paperchase Products Limited to Primary Capital Limited, a leading U.K.-based private equity firm. Paperchase, a wholly-owned subsidiary of Borders Group, is a retailer of stationery, cards and gifts based in the United Kingdom. Under the agreement, Borders Group said it will continue to purchase and carry products designed and sourced by Paperchase in its U.S. stores.
The company will receive proceeds of approximately $31 million (USD based on current exchange rates) upon closing, which is expected within the next week. The company is required to use $25 million of the proceeds to reduce the amount outstanding under its $90 million term loan credit facility. The completion of the sale is subject to customary closing conditions.
"The sale of our Paperchase business is another major step in strengthening our balance sheet — and enables us to place an even greater focus on our financial and strategic initiatives, which are vital to a Borders turnaround and revitalization of the brand," said Mike Edwards, president of Borders Group. "We look forward to continuing our strong relationship with the Paperchase team to provide our customers with the wide array of fashionable gift and stationery products they've come to expect from Borders."
"We're excited by the opportunity to build on the success of Paperchase, which is a well known design-led stationery brand in the U.K., whose products have received great visibility through Borders stores in the U.S.," said Graham Heddle, a Director of Primary Capital. "We look forward to working with the Paperchase team to build the business over the next few years."
Borders Group acquired a majority interest in Paperchase in 2004.