Last week, we reported that a donor close to former Los Angeles-based American Apparel CEO Dov Charney reportedly made a takeover bid worth $200 million. Now, new information has come out that the investors, Hagan Capital Group and Silver Creek Capital Partners, made an "upward revision" from the previous bid, and the current takeover bid is worth $300 million.
According to the Los Angeles Times, American Apparel said on Monday that it received approval from all voting groups for the reorganization plan the company submitted after filing for Chapter 11 bankruptcy last year. This plan would give nearly all company control to its largest bondholders and make the company private.
Chad Hagan, managing partner of Hagan Capital Group, told the Los Angeles Times that under the takeover offer, Charney would return to the company he founded, and was fired from, as co-CEO. Hagan had apparently been eyeing American Apparel for a few years, and contacted Charney about working together after the company filed for bankruptcy.
"We kept an eye on it, and the opportunity came up," he told the Los Angeles Times regarding the offer. He added that the company's problems are operational, and that the product line is still a worthwhile investment.
The takeover offer includes $130 million from the investors, including $90 million in new stock and $40 million from a new loan, allowing American Apparel to leave bankruptcy with approximately $160 million in new equity and cash, and a new line of credit worth $50 million.
The investors told the Los Angeles Times that senior lenders would recover their money in full, versus 33 percent to 77 percent under the company's current plan. They added that the takeover bid would pay unsecured creditors 10 times more compared to the reorganization deal.
The bankruptcy court is scheduled to make a decision on January 20, but analysts told the Los Angeles Times that the bankruptcy judge for the case would likely delay making a final decision until he has reviewed the takeover offer.
For more information on American Apparel, visit www.americanapparel.net.