Under the terms of the agreement, whose completion is subject to customary closing conditions and is expected within the next week, Borders will receive proceeds of approximately US$31m.
The company is required to use $25m of them to reduce the amount outstanding under its $90m term loan credit facility.
In addition, the Borders Group will continue to purchase and carry products designed and sourced by Paperchase in its U.S. stores. Borders acquired a majority interest in the company in 2004 and virtually all its stores nationwide feature Paperchase gifts and stationery products.
Commenting on the deal, Mike Edwards, President of Borders Group, Inc., said: “We look forward to continuing our strong relationship with the Paperchase team to provide our customers with the wide array of fashionable gift and stationery products they’ve come to expect from Borders”.
Graham Heddle, a Director of Primary Capital, added: “We look forward to working with the Paperchase team to build the business over the next few years”.
In addition to having a presence in Borders stores in the U.S., the company 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.