American Greetings Announces Plans to Acquire Recycled Paper Greetings

CLEVELAND, Dec. 30 /PRNewswire-FirstCall/ — American Greetings
Corporation (NYSE: AM) today announced it has reached an agreement to acquire
Recycled Paper Greetings, Inc.

American Greetings has agreed to purchase Recycled Paper Greetings, Inc.
(“Recycled Paper”). Recycled Paper is a Chicago-based preeminent creator and
designer of humorous greeting cards with annual net sales of approximately $80
million. Recycled Paper’s humor cards are distributed primarily through mass
retail partners, drug stores and specialty retail stores. The transaction is
subject to various closing conditions including a Chapter 11 reorganization
process being successfully completed for Recycled Paper and other closing
conditions.

The agreement providing for the acquisition contemplates that the
transaction will be effected pursuant to a so-called “pre-packaged” Chapter 11
reorganization. The reorganization plan is supported by Recycled Paper’s
secured creditors. Trade creditors are expected to be paid in full under the
plan. The parties hope to complete the Chapter 11 reorganization process by
the end of American Greetings’ first fiscal quarter, although there can be no
assurance that this will be the case. Consideration for the acquisition will
include a combination of $ 54.7 million of new 7.375% notes due in 2016 and up
to $18.4 million of cash in addition to the $44.2 million investment ($67.1
million of principal) previously made by American Greetings during July 2008.
The anticipated Chapter 11 reorganization process of Recycled Paper is
expected to provide American Greetings meaningful tax benefits compared to
alternative acquisition structures. American Greetings has also agreed to
provide up to $10 million Debtor in Possession (DIP) financing to Recycled
Paper Greetings.

The acquisition of Recycled Paper enhances American Greetings’ humor and
alternative greeting card offerings. American Greetings plans to continue to
use the Recycled Paper Greetings name.

Chief Executive Officer Zev Weiss said, “The acquisition of Recycled Paper
Greetings will be an excellent addition to our current product offering. This
transaction will give American Greetings an enlarged product design capability
and a compelling product offering that is expected to delight consumers and
enhance productivity for our retail partners.”

Advisors to American Greetings for this transaction included Imperial
Capital, LLC and Jones Day.

About American Greetings Corporation

For more than 100 years, American Greetings Corporation (NYSE: AM) has
been a manufacturer and retailer of innovative social expression products that
assist consumers in enhancing their relationships. The Company’s major
greeting card brands are American Greetings, Carlton Cards and Gibson, and
other paper product offerings include DesignWare party goods, American
Greetings and Plus Mark gift-wrap and boxed cards and Date Works calendars.
American Greetings also has the largest collection of electronic greetings on
the Web, including cards available at AmericanGreetings.com through AG
Interactive, Inc., the Company’s online division. AG Interactive also offers
digital photo sharing and personal publishing at PhotoWorks.com and
Webshots.com and a one-stop source for online graphics, animations, and more
at Kiwee.com. In addition to its product lines, American Greetings also
creates and licenses popular character brands through the American Greetings
Properties group. Headquartered in Cleveland, Ohio, American Greetings
generates annual revenue of approximately $1.8 billion, and its products can
be found in retail outlets domestically and worldwide, including Company-owned
American Greetings and Carlton Cards stores. For more information on the
Company, visit http://corporate.americangreetings.com .

Certain statements in this release may constitute forward-looking
statements within the meaning of the Federal securities laws. These statements
can be identified by the fact that they do not relate strictly to historic or
current facts. They use such words as “anticipate,” “estimate,” “expect,”
“project,” “intend,” “plan,” “believe,” and other words and terms of similar
meaning in connection with any discussion of future operating or financial
performance. These forward-looking statements are based on currently available
information, but are subject to a variety of uncertainties, unknown risks and
other factors concerning the Company’s operations and business environment,
which are difficult to predict and may be beyond the control of the Company.
Important factors that could cause actual results to differ materially from
those suggested by these forward-looking statements, and that could adversely
affect the Company’s future financial performance, include, but are not
limited to, the following:

    -- a weak retail environment and general economic conditions;
    -- the ability to achieve the desired benefits associated with its cost
       reduction efforts;
    -- the ability to close the acquisition of Recycled Paper, including, if
       we are unable to acquire Recycled Paper, whether we will be repaid our
       recent investment in its first-lien distressed debt securities;
    -- retail consolidations, acquisitions and bankruptcies, including the
       possibility of resulting adverse changes to retail contract terms;
    -- competitive terms of sale offered to customers;
    -- if the Company determines additional retail store closures are
       necessary;
    -- the timing and impact of investments in new retail or product
       strategies as well as new product introductions and achieving the
       desired benefits from those investments;
    -- consumer acceptance of products as priced and marketed;
    -- the ability to successfully integrate acquisitions, including Recycled
       Paper;
    -- the impact of technology on core product sales;
    -- the timing and impact of converting customers to a scan-based trading
       model;
    -- escalation in the cost of providing employee health care;
    -- the ability to identify, complete, or achieve the desired benefits
       associated with productivity improvement projects;
    -- the ability to successfully implement, or achieve the desired benefits
       associated with any information systems refresh the Company may
       implement;
    -- whether the Company executes share repurchase programs or the ability
       to achieve the desired accretive effect from any such share
       repurchases;
    -- the Company's ability to comply with its debt covenants;
    -- the Company's ability to successfully complete, or achieve the desired
       benefits associated with, dispositions, including the sale of the
       Strawberry Shortcake and Care Bears properties;
    -- fluctuations in the value of currencies in major areas where the
       Company operates, including the U.S. Dollar, Euro, U.K. Pound Sterling,
       and Canadian Dollar; and
    -- the outcome of any legal claims known or unknown.

Risks pertaining specifically to AG Interactive include the viability of
online advertising, subscriptions as revenue generators, the public’s
acceptance of online greetings and other social expression products, and the
ability to gain a leadership position in the digital photo sharing space.

In addition, this release contains time-sensitive information that
reflects management’s best analysis as of the date of this release. American
Greetings does not undertake any obligation to publicly update or revise any
forward-looking statements to reflect future events, information or
circumstances that arise after the date of this release. Further information
concerning issues that could materially affect financial performance related
to forward-looking statements can be found in the Company’s periodic filings
with the Securities and Exchange Commission, including the “Risk Factors”
section of the Company’s Annual Report on Form 10-K for the fiscal year ended
February 29, 2008.

[Via http://www.prnewswire.com]

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