Investor group offers to buy American Apparel for $300 million

Mon Jan 11, 2016 2:21pm EST
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By Subrat Patnaik and Tom Hals

(Reuters) - Bankrupt teen apparel retailer American Apparel Inc APPCQ.PK received a $300 million bid on Monday from a group of investors who are backing the return of the company's controversial founder, Dov Charney.

Hagan Capital Group and Silver Creek Capital Partners said their proposal included $90 million of new equity and a $40 million term loan, and backs a business plan from Charney, who was fired as chief executive in December 2014.

The enterprise value of the deal is above the valuation of $180 million-$270 million "publicly stated by the debtor in its disclosure statement," the firms said.

Los Angeles-based American Apparel operates 218 stores in 19 countries, and established its reputation with sexually charged advertising and U.S.-based manufacturing in an era of offshore factories.

The company said that while it remains focused on completing its bankruptcy exit plan, it acknowledged it had received the Hagan proposal.

"American Apparel evaluates all bids consistently," a spokeswoman for the retailer said in an email.

The Hagan proposal sets up a possible showdown at a Jan. 20 hearing in the U.S. Bankruptcy Court in Wilmington, Delaware. American Apparel must convince Judge Brendan Shannon its plan is fair and feasible, and Charney has objected.

American Apparel said on Monday all creditor classes voted in favor of its plan, which would bring the retailer out of bankruptcy under the control of its lenders, a group that includes Monarch Alternative Capital.   Continued...

The American Apparel factory headquarters is pictured in Los Angeles, California July 7, 2014. REUTERS/Jonathan Alcorn