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American Apparel Announces Refinancing

(4/9/2013)

As part of an effort to build greater financial strength, American Apparel (asi/35297) announced Friday that it successfully completed refinancing of its secured debt. The Counselor Top 40 supplier recently closed a private offering of the $206 million principal amount of its 13% senior secured notes due in 2020. It also entered into a new $35 million five-year asset-backed revolving credit deal with Capital One Bank. American Apparel used the net proceeds from the offering of notes, together with borrowings from the new credit line, to repay and terminate its prior credit facilities with Lion Capital LLC and Crystal Financial LLC.

Under the five-year agreement with Capital One, first lien borrowing costs will be significantly reduced – one of a number of financial advantages for the Los Angeles-based manufacturer of fashion basics. "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 CEO. "This financing effort will allow us to further focus our efforts in driving profitability for the benefit of all our stakeholders."

After talk of bankruptcy circulated around the supplier in 2011 following an $86 million loss in 2010, American Apparel has orchestrated a steady rebound in its operations. While the company's overall revenues have also grown, its performance specifically in the North American ad specialty market showed marked improvement: revenue increased 7.3% to nearly $97 million. That gain followed a 2011 in which sales rose 1.8% to $90.2 million.

"We look forward to building our relationship with American Apparel to help position the company for continued market leadership, growth and success," said Michael Burns, senior vice president and asset-based lending regional manager at Capital One Bank.



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