The brand that keeps on kicking just won't die for good.
American Apparel bought some time from its lender, Lion Capital, but it's not going to stay easy.
In a new deal with the lender, American Apparel Inc. said that it must boost profitability to stay within the terms of its new deal. Also, though the lender gave a"vote of confidence" to the company's chief executive officer, troublemaker Dov Charney, they will be bringing in some new senior executives. “Lion Capital has enormous admiration for both American Apparel and its founder, Dov Charney,” said Lyndon Lea, founder and partner of Lion. “We are working together with Dov to realign the capital structure of American Apparel to support a number of key initiatives within the business, including the hiring of several new senior executives.”
The loan deal eliminates a condition that the company keep earnings before interest, taxes, depreciation and amortization above a certain level through the end of this year. In August, American Apparel warned it would likely break the covenant and that its ability to continue as a going concern was in doubt. To meet the terms of its tweaked loan agreement, American Apparel now has to register consolidated EBITDA of $20 million for the 12 months ending Jan. 31. The NYSE Amex LLC gave the company until Nov. 15 to file its second quarter results and to avoid being delisted from the exchange.
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