American Greetings Announces Offering of Notes
Corporation is renegotiating bank agreement

CLEVELAND, June 7 /PRNewswire/ -- American Greetings Corporation (NYSE: AM) today announced that it is proposing to sell $400 million in senior subordinated notes due 2008. The company expects to use net proceeds from the offering to repay indebtedness and for other general corporate purposes. The notes have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.

Debt refinancing

In addition to the proposed note issuance, American Greetings is currently in the process of negotiating a new $375 million revolving senior secured credit facility. The proceeds of this facility would be used to repay outstanding indebtedness under the Corporation's existing multi-currency credit facility. This new facility would consist of two tranches: a $150 million, 364-day revolving facility, renewable at the option of the Company and its prospective lenders, and a $225 million, five-year revolving facility. This new facility would be secured by the Corporation's assets, including the capital stock of its domestic subsidiaries and 66-2/3 percent of the capital stock of its foreign subsidiaries. The new facility would contain covenants customary for such transactions.

American Greetings is also in the process of negotiating an asset-backed trade receivables securitization facility of up to $250 million. The proceeds of this facility would be used to repay the remainder of the Corporation's outstanding indebtedness under its existing multi-currency credit facility. The term of this facility would be up to three years. This facility would be secured by liens on the Corporation's accounts receivable and any and all assets relating to such accounts receivable. The facility would contain covenants customary for this type of facility.

The Corporation will be required to secure on an equal and ratable basis with the secured debt under its credit facilities its 6.10% notes due 2028 under the terms of the indenture governing those notes.

About American Greetings

American Greetings is the world's largest publicly held creator, manufacturer and distributor of greeting cards and social expression products. Its staff of artists, designers and writers comprises one of the largest creative departments in the world and helps consumers "say it best" by supplying more than 15,000 greeting card designs to retail outlets in nearly every English-speaking country. Located in Cleveland, Ohio, American Greetings has annual sales of more than $2.5 billion. For more information on the company, visit http://www.americangreetings.com/ on the World Wide Web.

The statements contained in this release that are not historical facts are forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties, including but not limited to: retail bankruptcies and consolidations, successful integration of acquisitions, a weak retail environment, consumer acceptance of products as priced and marketed, the impact of technology on core product sales and competitive terms
of sale offered to customers. Risks pertaining specifically to the aforementioned senior secured facility and the receivables securitization facility include the ability to enter into these proposed facilities or any other facilities on terms acceptable to American Greetings, or at all.