Borders has reached an agreement with the U.K. private equity firm Primary Capital Limited to sell Paperchase for $31 million. Borders acquired a majority stake in the stationery chain in 2004 for $24.1 million and all of its bookstores contain Paperchase sections. The company will use the proceeds to repay debt and is required to use $25 million to reduce the amount outstanding under its $90 million term loan credit facility.
At one point, Borders considered opening a separate chain of Paperchase stores in the U.S., but abandoned the idea after opening one outlet. Last summer, it reorganized Paperchase’s U.S. management and this spring cut all store-based Paperchase merchandisers and managers from Borders’ stores. Borders said it will continue to carry Paperchase products.
In a statement, Borders president Mike Edwards said the sale of our Paperchase “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.”