American Apparel Adds $80 Million Line of Credit, Announces Q4 and 2011 Results
American Apparel, the Los Angeles-based supplier, retailer and wholesaler, has secured an $80 million line of credit from Crystal Financial LLC. After rumors Monday saw the stock price jump 34 percent, the apparel company confirmed it would receive the new credit to replace an existing $75 million line from Bank of America.
Credit agent Crystal Financial LLC will provide the three-year credit facility immediately, which will mature on March 13, 2015. In addition to the Crystal Financial deal, the company also amended its credit agreement with Lion Capital LLP, extending its loan by two years to December 31, 2015.
"Crystal Financial has significant retail experience, understands our business and has an appreciation of the significance of the recent improvements in our operating performance," said Dov Charney, chairman and CEO of American Apparel. "We are fortunate to have them as a new business partner."
"Also, the vote of confidence and support from Lion Capital by way of the loan extension and other accommodations is also significant. We truly value their partnership," he added.
Crystal Financial LLC was founded in 2010, and it's lead investor is a hedge fund backed by billionaire businessman George Soros. The New York Post published a piece on Monday speculating that Soros would invest in the company, leading to a sharp increase in price and activity for American Apparel's stock.
"American Apparel has made great strides over the past year in improving its overall financial performance and we are pleased to be in a position to provide them with the financial flexibility needed to continue to build upon that momentum," said Stephen Krawchuk, managing director for Crystal Financial LLC. "The transactions announced today will provide an immediate benefit to American Apparel and we look forward to a long and mutually beneficial relationship with the company."
In addition to the new credit agreements, American Apparel also announced its fourth quarter and full year 2011 results this week, showing positive net sales for both periods ended December 31, 2011.
Net sales for the fourth quarter increased 9 percent to $157.6 million, which includes a 6 percent increase in wholesale sales, a 19 percent increase in online sales and a 7 percent increase in comparable store sales. In addition, operating expenses decreased $5.8 million and cash generated improved by $17.1 million.
For the full year 2011, net sales increased 3 percent to $547.3 million. Comparable store sales were flat, while wholesale net sales increased two percent and online sales increased 17 percent. The company's full year numbers were negatively impacted by increased fabric costs and a difficult first quarter, with subsequent quarters showed progressive growth.
Charney attributed part of the company's turnaround to its sales within the promotional products industry, stating, "We aggressively began marketing to our imprintable wholesale customers and saw positive results. We introduced a new catalog, increased our direct marketing efforts and improved our product offering. So far in 2012 we are continuing to experience growth in the 20%+ range."
The company's 2012 outlook projected an increase in net sales for the year, between $552 million and $559 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) should be in the range of $32 million to $40 million.
"These financial agreements, coupled with improved financial performance, will provide added flexibility in delivering upon our operating plan for 2012 and beyond. We have made steady progress in building sales and improving our financial performance in the past year; securing the refinancing of our debt should provide our stakeholders with confidence about our ability to continue our momentum and deliver upon our commitments. We have significant goals for our 2012 performance and so far we are off to a good start," Charney said.
For more information, visit www.americanapparel.net.