Borders Group, Ann Arbor, Mich., USA, this week reported that it will sell its Paperchase Products to Primary Capital, a 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 U.K. Under the agreement, Borders will continue to purchase and carry products designed and sourced by Paperchase in its U.S. stores.
Boprders will receive proceeds of approximately $31 million (based on current exchange rates) upon closing, which is expected within the next week. It 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.
Borders Group acquired a majority interest in Paperchase in 2004. Virtually all Borders stores nationwide feature Paperchase gifts and stationery products. In addition to having a presence in all Borders stores in the U.S., Paperchase operates 106 outlets in the U.K. including concessions in selected department stores run by House of Fraser, Selfridges, and Harrods, as well as in the Netherlands, Ireland, and the Middle East. The vast majority of Paperchase's merchandise is developed specifically by and for Paperchase and, as such, can only be found in Paperchase stores.
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