American Apparel Rumored to Seek Buyer
On April 6, Reuters reported that Los Angeles-based American Apparel, the retail and wholesale apparel manufacturer, may be looking for a buyer to bail the company out of its troubling financial situation.
Last week, American Apparel submitted its 2010 regulatory filing with the U.S. Securities and Exchange Commission, where it claimed an $86.3 million net loss for the year and stated it may need to file for bankruptcy protection. The company is working with financial advising organization Rothschild to explore its options.
In an interview with The Los Angeles Times, American Apparel CEO Dov Charney maintained that the company would begin to recover in 2011. "While it's a remote possibility, we think we're going to have a decent year," he said. "We're in here fighting hard. ... We're seeing recovery in worker efficiency and we're seeing a recovery in sales momentum."
"I think the prospects are that we're going to have a recovery year this year. 2012, we'll be back to our previous pattern of profitability," he added. Despite the net loss, the company reported $533 million in sales in 2010.
In March, Charney purchased an additional 1.8 million shares of company stock, increasing his stake to 54 percent. The purchase saw the price increase to $0.99 a share that week. As of noon today, April 6, the stock price had dropped to $0.81 a share.
Lion Captial, the company's largest investor at $81.2 million, had two of its members resign from American Apparel's board of directors. The London-based investment firm, which held two of the nine board seats, stepped down "to allow Lion flexibility in evaluating its options to optimize its investment," American Apparel said in its filing.
American Apparel was reached for comment but did not respond by the time of publication.