LOS ANGELES, Jan 2 (Reuters) - Recycled Paper Greetings Inc filed for Chapter 11 bankruptcy on Friday as part of its proposed sale to American Greetings Corp, while its investors charged that the suitor had illegally attempted to eliminate the independent greeting card company as a rival.
American Greetings, the No. 2 U.S. greeting card maker behind Hallmark Cards, earlier this week announced the acquisition plans, which involve a prepackaged Chapter 11 reorganization.
RPG Investment Holdings and funds affiliated with private equity firm Monitor Clipper Partners LLC said in a separate statement on Friday that they 'strongly oppose the actions taken by American Greetings' prior to the bankruptcy filing.
According to Recycled Paper's website, it is a Monitor Clipper portfolio company.
'Through its unlawful actions, we believe American Greetings is attempting to eliminate Recycled Paper Greetings as a competitor, in an effort to gain more widespread traction in the lucrative market segment in which Recycled Paper Greetings excels,' the investors said.
RPG Investment said it is pursuing legal action against American Greetings in federal court in Chicago.
It alleged that American Greetings violated contractual obligations when it bought a majority interest in Recycled Paper's senior debt.
American Greetings spokeswoman Patrice Sadd declined to comment on the investor charges.
The acquisition, which is subject to regulatory review and slated to close by late May, will include a combination of $54.7 million of new 7.375 percent notes due in 2016 and up to $18.4 million of cash in addition to the $44.2 million investment made by American Greetings in July.
The terms also include a restructuring of Recycled Paper's debt. American Greetings will also provide up to $10 million in debtor in possession financing to Recycled Paper.
In its bankruptcy filing, the Chicago-based company known for its humorous cards said it had between $100 million and $500 million in both assets and liabilities. Its creditors included retailers Target Corp and Walgreen Co .
Shares of Cleveland-based American Greetings, down more than 60 percent from their year-high of $21.79, fell 31 cents, or 4.1 percent, to close at $7.26 on the New York Stock Exchange.
(Reporting by Lisa Baertlein; editing by Richard Chang) Keywords: AMERICANGREETINGS RPG/ (lisa.baertlein@thomsonreuters.com; +1 213 955 6742; Reuters Messaging: lisa.baertlein.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
American Greetings, the No. 2 U.S. greeting card maker behind Hallmark Cards, earlier this week announced the acquisition plans, which involve a prepackaged Chapter 11 reorganization.
RPG Investment Holdings and funds affiliated with private equity firm Monitor Clipper Partners LLC said in a separate statement on Friday that they 'strongly oppose the actions taken by American Greetings' prior to the bankruptcy filing.
According to Recycled Paper's website, it is a Monitor Clipper portfolio company.
'Through its unlawful actions, we believe American Greetings is attempting to eliminate Recycled Paper Greetings as a competitor, in an effort to gain more widespread traction in the lucrative market segment in which Recycled Paper Greetings excels,' the investors said.
RPG Investment said it is pursuing legal action against American Greetings in federal court in Chicago.
It alleged that American Greetings violated contractual obligations when it bought a majority interest in Recycled Paper's senior debt.
American Greetings spokeswoman Patrice Sadd declined to comment on the investor charges.
The acquisition, which is subject to regulatory review and slated to close by late May, will include a combination of $54.7 million of new 7.375 percent notes due in 2016 and up to $18.4 million of cash in addition to the $44.2 million investment made by American Greetings in July.
The terms also include a restructuring of Recycled Paper's debt. American Greetings will also provide up to $10 million in debtor in possession financing to Recycled Paper.
In its bankruptcy filing, the Chicago-based company known for its humorous cards said it had between $100 million and $500 million in both assets and liabilities. Its creditors included retailers Target Corp and Walgreen Co .
Shares of Cleveland-based American Greetings, down more than 60 percent from their year-high of $21.79, fell 31 cents, or 4.1 percent, to close at $7.26 on the New York Stock Exchange.
(Reporting by Lisa Baertlein; editing by Richard Chang) Keywords: AMERICANGREETINGS RPG/ (lisa.baertlein@thomsonreuters.com; +1 213 955 6742; Reuters Messaging: lisa.baertlein.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.