Retail Detail. More American Apparel Troubles

March 10, 2009 • Shopping


There is more trouble ahead for embattled retailer American Apparel. The cash-poor retailer known more for it's founder's antics and sexually explicit ads than it's trendy T-shirts faces two key financial deadlines this

Following an expensive refinancing in December, American
Apparel must raise $16 million in new financing by Friday in order to
avoid issuing warrants for two million shares to lender SOF
Investments, to which it owes $51 million.

Even more critical
is a March 21 deadline to renew or extend the April 20 maturity date of
the SOF loan. If American Apparel cannot renegotiate the loan by that
date, Dov_charney
$60.6 million under a Bank of America credit facility would
immediately become due.

Last February 10 founder and chief executive Dov Charney (left) made a $4 million loan to the company, according to Securities and Exchange Commission documents.
That borrowing was on top of a $2.5 million loan he made to American
Apparel in December. Both loans were made at an annual interest rate of

“Those loans are a horrible sign for the company,”
said Howard Davidowitz, chairman of Davidowitz & Associates, a
retail consulting and investment banking firm based in New York. “This is the worst credit environment since the Great Depression and
for American Apparel to be dependent on creditors is a terrible
position,” added Davidowitz.

As of Sept. 30, American Apparel had $13.9 million in cash on it balance sheet and $111.6 million in debt.

Charney declined to comment on American Apparel’s
financing activities to WWD, but said: “I am very confident about our
company. I am feeling great about the business and believe we will have
a fantastic year.” Um, what planet is he living on?

Source: WWD

See the Top Ten Summer 2016 Trends for Women Over 40

Tags: , , , ,

Leave a Reply