Borders Group (Ann Arbor, Mich.) said it has entered into an agreement to sell its Paperchase Products Ltd. unit for $31 million to Primary Capital Ltd., a U.K.-based private equity firm. Paperchase is a retailer of stationery, cards and gifts based in the U.K.
Under the agreement, Borders Group will continue to purchase and carry products designed and sourced by Paperchase in its U.S. stores. Borders, a financially struggling seller of books and music, said it will receive proceeds of approximately $31 million upon the sale’s closing, which is expected within the next week. The company said is required to use $25 million of the proceeds to reduce the amount outstanding under its $90 million term loan credit facility.
“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 Borders Group president Mike Edwards.
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.