December 22, 2009 / 3:59 PM / 9 years ago

UPDATE 1-American Greetings to stop manufacturing party goods

* Says move to affect 225 jobs

* Says in deal with Amscan Inc to source party goods

* To sell party goods inventory and equipment to Amscan

* Says to incur $10 mln-$15 mln impairment costs

BANGALORE, Dec 22 (Reuters) - American Greetings Corp (AM.N) said it will wind down its party goods manufacturing operations, affecting about 225 jobs, and take related charges.

The greeting cards maker said it will also sell inventory, equipment and processes used to manufacture party goods to Amscan Inc and source the products from the party goods maker.

American Greetings expects to incur related non-cash asset impairment costs of about $10 million to $15 million.

It also expects to incur facility related closure costs, primarily severance, in an amount that is still being quantified, it said in a statement.

As part of the deal, American Greetings expects to receive about $25 million in cash and a warrant to purchase about 2 percent of the class A common stock of AAH Holdings Corp, Amscan’s parent.

American Greetings will continue to distribute party goods to its retail partners.

“As a result of the strategic alliance, American Greetings will be able to offer a broader assortment of licensed and non-licensed party goods products to its retail partners,” the company said in a statement.

Shares of the Cleveland-based American Greetings were up more than 3 percent at $24.10 Tuesday morning on the New York Stock Exchange. (Reporting by Abhishek Takle in Bangalore; Editing by Aradhana Aravindan)

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