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.