Home / Knowledge / News / Apparel/Garments / American Apparel secures $14.9 mn in new financing
American Apparel secures $14.9 mn in new financing
27
Apr '11
American Apparel Inc, a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel, announced it has raised $14.9 million in new capital, which will allow it to take advantage of improving business conditions, while at the same time meeting increased bank required reserves.

The company has agreed to sell approximately 15.8 million shares of common stock at $0.90 a share to a group of private investors led by Canadian financier Michael Serruya and Delavaco Capital. The investors also received the right to purchase up to an additional approximately 27.4 million shares at the same price within 180 days, subject to certain anti-dilution and other adjustments. In addition, American Apparel chairman and CEO Dov Charney would purchase up to an initial approximately 0.8 million shares at $0.90 a share, with a similar right to purchase up to an additional approximately 1.6 million shares.

"We deeply appreciate this vote of confidence from Michael Serruya and his colleagues," said Mr. Charney. "We are also grateful for the support we've received from our lenders."
"We believe in the American Apparel brand and we believe in Dov Charney," Mr. Serruya said. "We are convinced that with adequate resources, Dov and his experienced management team will lead American Apparel to new heights."

As a condition to the investors entering into the financing agreements, the investors required that the company provide Mr. Charney a right to receive up to three installments of additional shares of common stock beginning in 2013 as anti-dilution protection if certain stock price performance benchmarks ranging from $3.25 to $5.25 per share are achieved. In the event these benchmarks are achieved in full, the company would be required to issue an additional approximately 39.7 million shares to Mr. Charney.

The issuance of shares under the new financing agreements also will require the issuance of additional warrants to Lion Capital and will reduce the exercise price of Lion's existing warrants under the anti-dilution provisions of their credit agreement and adjustments to the company's warrant with SOF Investments.

Among other things, the new capital should allow the company to execute its business plan while meeting the new increased minimum excess availability requirement of its first-lien lender, as described below.

The company is also in discussions with its lenders regarding amendments to its credit agreements with Bank of America and Lion Capital. Among other things, the Bank of America amendment is expected to increase the minimum excess availability requirement to $12.5 million from $7.5 million, and the Lion amendment also is expected to expand Lion's anti-dilution protections with respect to its warrants. The amendments also are expected to waive the requirement that the year-end audit for fiscal year 2010 be provided without a "going concern" or similar qualification.

The issuance of shares pursuant to the purchase rights in the financing agreements and Mr. Charney's anti-dilution provision is subject to approval of the company's stockholders at the company's next annual meeting of stockholders, currently scheduled for June.

The company will be filing with the Securities and Exchange Commission a Current Report on Form 8-K with additional information about the financing transactions and the credit agreement amendments.

American Apparel Inc


Must ReadView All

Textiles | On 20th Sep 2017

India needs to double cotton farmers’ income: top official

India needs to double the income of cotton farmers and non-farmers...

Textiles | On 20th Sep 2017

Pakistan seeks more JVs with China: textile minister

The Pakistani Government wants to forge more joint ventures (JVs)...

Apparel/Garments | On 20th Sep 2017

Egypt’s garment exports touch $941 million in 8 months

Egypt's garment exports touched $941 million in the first eight...

Interviews View All

Smith Vaghasia
Sanado India

Online remains the best destination for shopping

Rashi Menda
Zapyle

Every fifth sale we make on Zapyle is a repeat purchase

Ghanshyam Ghoghari
Kimora Fashion

Bridalwear is not about reds and whites anymore

Lynda Kelly
Suominen Corporation

Suominen Corporation is a manufacturer of nonwovens as roll goods for...

Ashok Desai
Bombay Textile Research Association

Bombay Textile Research Association (BTRA) is a leading name in textile...

Suresh Patel
Sidwin Fabric

Sidwin Fabric is a manufacturer and exporter of polypropylene textiles and ...

Yash P. Kotak
Bombay Hemp Company

One of the directors of Bombay Hemp Company, Yash P. Kotak, speaks to...

Divvya and Nidhhi Gambhir
Walnut

<b>Divvya and Nidhhi Gambhir</b> started their career with the launch of...

Sonam & Paras Modi
SVA

Sonam and Paras Modi's Sva Couture is synonymous with head-turning...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

September 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Active Poll

Do you see sustainability as a route to business growth?

Yes
74.5%
No
12.8%
Skip
12.8%

Total Votes: 47

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Active Poll

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes
61.7%
No
25.5%
Skip
12.8%

Total Votes: 47

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Active Poll

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes
87.2%
No
6.4%
Skip
6.4%

Total Votes: 47

Thanks for your valuable feedback. Claim your free latest sustainability e-book.

Active Poll

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes
70.2%
No
10.6%
Skip
19.1%

Total Votes: 47


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search