Reuters: Bankruptcy News: UPDATE 1-US supplier edges Clinton Cards into administration

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UPDATE 1-US supplier edges Clinton Cards into administration May 9th 2012, 07:50 Wed May 9, 2012 3:50am EDT LONDON May 9 (Reuters) - Cards and gifts retailer Clinton Cards expects to enter administration, becoming the latest casualty on the British high street after its biggest supplier American Greetings bought up loans from its banks and promptly called them in. Clinton Cards said in a statement announcing the suspension of trading in its shares that it had been in breach of some conditions attached to 35 million pounds ($56.5 million) worth of loans and that it was not in a position to repay them. The group said it had been informed overnight that its banks Barclays and Royal Bank of Scotland, which had given it temporary waivers over the breaches, had sold the loans. Clinton Cards said that it had not been party to negotiations leading up to the deal but that it had anticipated American Greetings would extend the waivers granted by the banks and start talks with a view to supporting it. "However, having secured control of the debt, American Greetings immediately informed the board that it intended to enforce the loan against the company and the board has concluded that because it is unable to repay the loan it has no option but to concur with American Greetings proposal to place the company and its subsidiaries into administration," the group said in Wednesday's statement. The firm, which trades from about 628 Clinton Cards stores and 139 Birthdays outlets, had been due to publish the results of a strategic review into how it will cope with tough trading conditions and intense competition from supermarkets and the Internet. The company announced in March that it had slumped to a first half loss and warned that its prospects for the second half were worse than originally anticipated. Shares in Clinton Cards, which have lost more than 80 percent of their value since the start of 2010, closed at 6.75 pence on Tuesday, valuing the group at about 14 million pounds ($22.6 million). Nobody at American Greetings could immediately be reached for comment. With British shoppers' disposable incomes squeezed by rising prices, muted wage growth and government austerity measures, store chains have faced tough conditions, pushing a string of retailers to the brink. Link this Share this Digg this Email Reprints

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