American Apparel Sells 18% Stake To Lion Capital, Shares Jump 68%
josh hunter
- March 13 2009
- 510 views
- 2 comments
American Apparel (APP) has agreed to sell eighteen percent of the company to private-equity firm Lion Capital for 80 million dollars. According to reports, American Apparel has been facing looming loan obligations of 111.6 million dollars. The company reportedly owes SFO Investments 51 million dollars and Bank Of America 61 million dolars.
CEO Dov Charney personally invested as much as 6.5 million dollars into the company since December in order to sustain operations of the company’s 260 stores in 19 countries.
According to Market Watch: “The company said it would use the proceeds from Lion Capital’s $80 million investment to retire its second-lien credit line with SOF Investments. The investment would come in the form of secured second-lien notes maturing in Dec. 31, 2013. A director and a partner at Lion Capital will join American Apparel’s board.”
Lazard Capital Analyst Todd sanders told Market Watch that the free cash flow “generated by American Apparel over the next five years, even as it self-funds its own growth, should be more than enough to pay down all outstanding debt and allow for excess cash on the balance sheet. The company’s popularity spans a wide variety of cultures and attracts a well insulated, metro-centric demographic. The shares are highly attractive.”
Shares jumped 68% and closed at $2.50 on Friday.
Transworld Business recently toured the company’s 800,000 sq-foot factory in downtown LA. CLICK HERE to see the video.
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March 13th, 2009 at 2:01 pm
MR,
I wish I had taken your advice from the “Friday Free For All” comment you made on Feb 22!
“American Apparel has been innovative and has created a sustainable competitive advantage. I would buy some of their stock?great buy!!”
You called it sir … Hat’s off. I hear that CNBC is looking to replace Jim Cramer after Jon Stewart destroyed him in that interview on the Daily Show …maybe you should step in!