American Apparel Secures $15 Million Investment
Last week's rumors that American Apparel was in talks to receive an investment to prevent insolvency were borne out over the weekend, with a private group investing $15 million into the company, with the potential to increase that amount up to $45 million.
The investment includes $15 million in stock warrants, at a stock price of $0.90 a share, with the option to invest another $30 million at the same rate. American Apparel CEO Dov Charney also invested $700,000 of his own money, buying 800,000 shares at the $0.90 price. In total, the 15.8 million shares of stock represent 20 percent of the company's total shares.
Members of the investor group include Michael Serruya, a Canadian investor most well known for making a similar investment in smoothie chain Jamba Juice in 2009, and Delavaco Capital, a Fort Lauderdale, Florida-based investment firm.
News of the possible influx of funds saw American Apparel's stock price rise more than 13 percent to $1.30 on the day of the announcement, with continued increases this week. As of 2:30 p.m. Wednesday, the company's stock was $1.47, a 63 percent increase over the closing price on April 1 of $0.90, the day the company reported at $86.3 million net loss for the previous year in its annual regulatory filing.
Kyle A. Richardson is the editorial director of Promo Marketing. He joined the company in 2006 brings more than a decade of publishing, marketing and media experience to the magazine. If you see him, buy him a drink.