S&P lowers debt rating on American Greetings
CHICAGO (AP) — Standard & Poor's Ratings Services on Monday cut its rating on American Greetings Corp. deeper into "junk" territory because of the amount of debt involved in its buyout.
American Greetings announced last week that it had agreed to be taken private by a group led by some of its top executives, including Chairman Morry Weiss and CEO Zev Weiss. The deal values the company at about $580 million, or $878 million including assumed debt and the settlement of some stock options.
S&P cut American Greetings three notches, to "B+" from "BB+."
The company had said that the acquisition would be financed with company stock owned by the Weiss family, $600 million in loans, cash funded by a $240 million preferred stock investment from a subsidiary of Koch Industries Inc. and available cash. The deal is expected to close in July.
Shares of American Greetings, based in Cleveland, rose 6 cents to close at $18.22 in afternoon trading. The group formed by the Weiss family plans to buy shares of the company it doesn't already own for $18.20 per share. Shareholders will get $18.35 if a 15-cent dividend is set.