Report: American Apparel Seeks New CashTuesday, June 24, 2014
Clothing manufacturer and retailer American Apparel may be seeking to raise new sources of capital as the firm’s current leaders seek to wrest control of the company from founder Dov Charney.
Citing an unnamed source, Dow Jones reported Tuesday that American Apparel may pursue a debt or equity offering in an attempt to raise money. The Los Angeles-based American Apparel faces questions as to whether the firm is in a position to take on new debt or refinance what it already owes after its last week announced plans to fire Charney as chief executive.
American Apparel spokesman Terry Fahn said he had no comment on the report.
On Monday, American Apparel announced that the company hired Peter J. Solomon Co. of New York City for financial and strategic advice. The New York firm’s advertised practice areas are mergers and acquisitions, special committee and fairness opinion practice, restructuring and recapitalization and financing advisory.
American Apparel announced on June 15 that its board voted to replace Charney from his position as chairman and immediately suspend him from the chief executive’s post, and fire him for cause after a 30-day waiting period. The company disclosed that the move may result in a default of existing debts.
Charney could not be reached for comment on Tuesday. A Securities and Exchange Commission filing submitted on Monday reported that Charney has been in contact with supporters and plans to fight the board’s decision to fire him.
American Apparel stock fell 21 percent Tuesday to close at $0.53 per share on the New York Stock Exchange.