Spencer Gifts Acquired by ACON Investments and Management

Business Wire, August 21, 2007

EGG HARBOR TOWNSHIP, N.J. -- Spencer Gifts Holdings, Inc. today announced the completion of the management-led buyout of the company backed by an affiliate of private equity firm ACON Investments. Spencer Gifts operates two distinct retail concepts, Spencer's and Spirit Halloween, in over 1,100 locations throughout the United States, Canada, and Puerto Rico. Terms of the transaction were not disclosed.

Spencer's, one of the oldest and best-known specialty retailing chains, was founded in 1947, and operates over 600 mall-based stores. Spencer's targets Generation Y consumers and specializes in unique, humorous and innovative products including accessories, decor items and gifts. Over the past four years, Spirit Halloween has grown to become the nation's leading seasonal Halloween retailer, expanding its store count to over 500 in 2007. Spirit carries the widest and deepest selection of Halloween-related products including costumes, wigs, masks, accessories and seasonal decor in stores that are typically open for just two months each fall.

ACON Investments is purchasing Spencer Gifts Holdings, Inc. from affiliates of GB Merchant Partners, the private equity arm of Gordon Brothers Group, which is retaining a minority stake in the business. The Company will continue to be operated by its current management team, which is led by CEO Steven Silverstein, the former President of Linens 'n Things. As part of the transaction, management has increased its current ownership position in the company.

"Building upon the success we have achieved over the last four years, we are well positioned to capture future growth opportunities," said Silverstein. "Our evolving merchandising strategy, enhanced by our new store design, further strengthens Spencer's brand identity. Meanwhile, we have continued to aggressively grow the Spirit Halloween concept. We look forward to working closely with ACON Investments on a series of initiatives, and to providing our passionate customers with innovative merchandise and a memorable and exciting shopping experience in both of our concepts."

"The ability to acquire Spencer's and Spirit Halloween was extremely compelling. We're partnering with an outstanding management team to build value in two differentiated retail concepts that are poised for success and growth, " said Ken R. Brotman, Founding Partner of ACON. "The company has gone through significant changes over the past four years in order to build a solid foundation, which will ensure Spencer's continued success. While still in its early stages, Spirit is by far the nation's largest seasonal Halloween retailer and is growing at a rapid pace and we are quite excited about its prospects," added Brotman.

Added Mark Schwartz, CEO of Gordon Brothers Group, "We have enjoyed working with Steven Silverstein, Ike Silvera and the entire Spencer Gifts management team to build a fantastic company, and look forward to maintaining a strong relationship with them and ACON during the Company's next phase of development."

Financing for the transaction is being provided by a group of lenders led by CIT and by Laminar Direct Capital.

GB Merchant Partners was advised by Thomas Weisel Partners and ACON Investments was advised by Financo, Inc. in the transaction.

About Spencer Gifts

Spencer Gifts LLC is a lifestyle retail company that operates two unique, national brands -- Spencer's and Spirit Halloween -- throughout the United States, Canada, Puerto Rico and online.

Spencer's (www.spencersonline.com) has been focused on delivering humor and enjoyment to people's lives for over 60 years. Specializing in innovative, humorous and unique merchandise, Spencer's is the mall destination for entertainment, excitement and irreverent fun for its core Generation Y guest. Spencer's operates over 600 stores throughout the United States, Canada, Puerto Rico and online.

Spirit Halloween (www.spirithalloween.com) is rapidly growing as the national destination for everything you can imagine for Halloween. Specializing in unique, entertaining and exciting merchandise for Halloween enthusiasts, Spirit has been offering one-stop shopping for all your Halloween needs for over 20 years. Spirit Halloween operates over 500 locations in strip centers and malls across the United States and online.

About ACON Investments

ACON Investments is a Washington D.C.-based private equity investment firm that manages private equity funds and special purpose partnerships in the United States, Europe and Latin America. Founded in 1996, ACON and its principals have managed over $1 billion of capital. ACON pursues a theme-based investment strategy by focusing on industries and businesses at key inflection points in their development and pursues these opportunities in close partnership with established management teams. ACON has offices in Washington, Los Angeles, and Madrid, Spain.

About GB Merchant Partners and Gordon Brothers Group

GB Merchant Partners, LLC (gbmerchantpartners.com) is the private equity and debt affiliate of Gordon Brothers Group with over $600 million of available capital taking majority and minority equity positions in middle-market companies. GB Merchant Partners leverages Gordon Brothers' consumer products and retail expertise, and prefers to partner with management teams to complete a buyout, fund growth or facilitate a restructuring. In addition GB Merchant Partners provides structured loans and purchases secondary market securities.