RC2 pulls out of acquisition of publishing unit

RC2, which makes products and toys for infants and children, agreed in June to buy the division from privately held Publications International for $163 million in cash. At the time RC2 said it planned to finance the purchase and future working capital with a new syndicated senior secured credit facility for $325 million.

As economic conditions have worsened and credit markets have tightened, businesses have found it increasingly more difficult to obtain the financing that they need for acquisitions and development projects, leading may to postpone or pull out of their plans altogether.

"High financing costs coupled with other restrictive terms and conditions precluded us from structuring a transaction with the proper levels of operating and financial flexibility," RC2 Chief Executive Curt Stoelting said in a statement.

Stoelting added that the company hopes to revisit the potential purchase when economic and capital market conditions improve.