LOS ANGELES—American Apparel Inc. announces it has raised $14.9 million in new capital, which will reportedly allow it to take advantage of improving business conditions while at the same time meeting increased bank required reserves. 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.
To raise the funds, American Apparel will 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, a private equity firm focused on investments in the natural resource, real estate infrastructure, and retail and franchising sectors. American Apparel chairman and CEO Dov Charney will also purchase up to an initial approximately 0.8 million shares at $0.90 a share.
The company is also in discussions with its lenders regarding amendments to its credit agreements with Bank of America and Lion Capital. The Bank of America amendment is expected to increase the minimum excess availability requirement to $12.5 million from $7.5 million.
The issuance of shares and Charney's anti-dilution provision is subject to approval of the company's stockholders at its next annual meeting of stockholders, currently scheduled for June.
The company will be filing a Current Report on Form 8-K with the Securities and Exchange Commission, including additional information about the financing transactions and the credit agreement amendments.