Papercraft has agreed to a leveraged buy-out.

The Pittsburgh-based firm said it reached a definitive agreement on a $240-million leveraged buy-out with company managers and other investors. As the deal was first reported in April, Papercraft Corp. shareholders can exchange each of their shares for $18 in cash and securities with a face value of $4.12 but a market value of about $2. Citicorp Capital Investors, a subsidiary of Citicorp, and a group of institutional investors are partners with Papercraft managers in taking over the firm, which makes gift wrap, tape and toilet bowl cleaner at 17 locations. Financing for the deal must still be arranged, and it must be approved by shareholders.