Sale of Publications International Kids' Unit Called Off  

-- Publishers Weekly, 10/6/2008 2:56:00 PM

The sale of Publications International Ltd.’s children’s publishing group to the toy maker RC2 Corp. has been called off. Curt Stoelting, CEO of RC2, cited high financing costs and the current credit crunch for RC2’s decision to not go forward with the deal. “Recent shifts in the capital markets have impacted the availability of capital and increased the costs of financing,” Stoelting said in a statement, adding that the current conditions “precluded is from structuring a transaction with the proper levels of operating and financial flexibility.”

RC2 Corp. announced its intention to buy the group in June, and had hoped to complete the $163 million purchase by the end of the third quarter. The children’s group, which publishes a mix of interactive titles, had sales of $112 million in the 12 month period ended March 31, 2008. No one at Publications International was available to comment on its plans for the children’s group, although Stoelting said RC2 would re-consider the acquisition once the capital markets improve. RC2 will pay up to $300,000 to cover the cost of audits and other expenses incurred by PIL in preparing for the transaction.