American Apparel Successfully Completes Refinancing of Secured Debt
Los Angeles-based American Apparel Inc. announced that it has successfully closed a private offering of $206 million principal amount of its 13 percent senior secured notes due 2020 and has entered into a new $35 million five-year asset-backed revolving credit facility with Capital One Bank. The company used the net proceeds from the offering of the notes, together with borrowings under the new revolving credit facility, to repay in full and terminate its prior credit facilities with Lion Capital LLC and Crystal Financial LLC.
"Our new debt arrangements, coupled with improved financial performance, will provide added flexibility in delivering upon our operating plan for 2013 and beyond," said Dov Charney, American Apparel's chairman and chief executive officer. "We appreciate the vote of confidence from Capital One and the purchasers of the notes and the completion of this financing effort will allow us to further focus our efforts in driving profitability for the benefit of all of our stakeholders."
The agreement with Capital One Bank brings to an end a series of loans the company took on over the past four years. Lion Capital LLC invested $80 million into the company in 2009, and amended that agreement in 2010. American Apparel then secured another $80 million loan from Crystal Financial in 2012, which replaced an earlier line of credit from Bank of America. The new offering will be used to fully pay off those two loans, with the remainder going toward "general corporate purposes."
"I would like to personally thank Lyndon Lea of Lion Capital for his unwavered support as a lender during the last four years, even when others doubted American Apparel's 'Made in USA' sweatshop-free mission," Charney said. "Also a special thank you is due to Michael Serruya and to Andy De Francesco of Delavaco Capital, Inc. in Toronto, for their initial investment which came at a critical time in 2011, and their continued support and friendship. At American Apparel we are focused on leveraging art, design and innovation to advance our business process, rather than relentlessly pursuing off shore cheap labor. We welcome bondholders to our family of stakeholders, and re-emphasize that it is our mission to ensure that all stakeholders-customers, workers, shareholders, suppliers, and now bondholders-have a positive experience when touched by our business. We also welcome Capital One as our new bank, under our new five year agreement with them, which will greatly reduce our first lien borrowing costs. At this juncture it's time to roll up our sleeves and build American Apparel's future."
"Capital One Bank is pleased to work with American Apparel, a leading manufacturer, distributor, and retailer of branded fashion basic apparel, to support the company's recapitalization and growth strategy," said Michael Burns, Senior Vice President and Asset Based Lending Regional Manager, Capital One Bank. "We look forward to building our relationship with American Apparel to help position the company for continued market leadership, growth and success."
For more information, visit www.americanapparel.net.