Portrait Corp: To Sell Assets to CPI for $100 Million


Portrait Corporation of America Inc. has entered into a definitive agreement with CPI Corp. to sell substantially all of the company's operating assets and its foreign and domestic affiliates for $100 million in cash, subject to certain closing adjustments, and the assumption of certain liabilities.

On Aug. 31, 2006, PCA and certain of its direct and indirect subsidiaries filed voluntary petitions for relief under the Bankruptcy Code, commencing jointly administered chapter 11 cases before the United States Bankruptcy Court for the Southern District of New York. The parties intend to consummate the transaction under Sections 363 and 365 of the Bankruptcy Code. The transaction is subject to certain conditions, including the approval of the Bankruptcy Court and other governmental regulatory approvals. PCA will file a motion seeking approval of the asset purchase agreement. The parties expect the Bankruptcy Court to conduct a hearing on the motion in May 2007. The transaction is expected to close by the end of June 2007.

"CPI is excited about the opportunity to leverage the company's strong digital capabilities and infrastructure and proven project management skills to upgrade Pac's studios with digital technology, improve convenience and flexibility and enhance the overall customer experience," Renato Cataldo, CPI's president and chief executive officer, stated. "Cpi is also pleased to be embarking on a relationship with Wal-Mart which the company looks forward to strengthening and expanding both domestically and internationally including in a new branded format. Finally, the company is pleased about the opportunities this deal brings to employees of both organizations. CPI has consciously become a more field-focused organization in recent years to better address the needs of the company's Sears Portrait Studio associates. CPI aims to bring the same focus on the PCA field organization and will eagerly solicit their views and concerns. CPI believes the combination will benefit customers, employees and shareholders alike."

About CPI Corp

CPI Corp (NYSE: CPY) is a portrait photography company offering photography services in the United States, Puerto Rico and Canada through Sears Portrait Studios. The company also operates searsphotos.com, the vehicle for the company's customers to archive, share portraits via email and order additional portraits and products.

About Portrait Corporation of America

Portrait Corporation of America Inc. -- http://pcaintl.com/ -- provides professional portrait photography products and services in North America. The company operates portrait studios within Wal-Mart stores and Supercenters in the United States, Canada, Mexico, Germany and the United Kingdom. The company also operates a modular traveling business providing portrait photography services in additional retail locations and to church congregations and other institutions.

PCA is the sole operator of portrait studios in Wal-Mart stores and supercenters in the U.S., Canada and Mexico. As of April 30, 2007, PCA operates 2,048 studios worldwide, including 1,695 in the U.S. and Puerto Rico, 243 in Canada, 105 in Mexico and 5 in the United Kingdom. During its completed fiscal year ended Jan. 28, 2007, PCA photographed over 5.6 million customers and generated sales of $290 million.

Portrait Corporation and its debtor-affiliates filed for Chapter 11 protection on Aug. 31, 2006 (Bankr S.D. N.Y. Case No. 06-22541). John H. Bae, Esq., at Cadwalader Wickersham & Taft LLP, represents the Debtors in their restructuring efforts. Berenson & Company LLC serves as the Debtors' financial advisor and investment banker. Kristopher M. Hansen, Esq., at Stroock & Stroock & Lavan LLP represents the Official Committee of Unsecured Creditors. Peter J. Solomon Company serves as financial advisor for the Committee. At June 30, 2006, the Debtor had total assets of $153,205,000 and liabilities of $372,124,000