American Apparel could be bought for 300 million dollars

New York - Has Dov Charney finally found his way back into the company he's held so near and dear to his heart?

The latest chapter in the saga that is the fall of American Apparel now includes a 300 million dollar bid that could land him back at the company.

Hagan Capital Group and Silver Creek Capital Partners announced today that they have submitted a 300 million dollar bid to acquire American Apparel. The investment would be managed by PressPlay Group, the private equity firm which is part of San Francisco and Shanghai-based PressPlay Global, which is backed by Hagan and Silver Creek.

The terms of the proposal appear to be very promising for American Apparel. Hagan and Silver Creek, collectively known as the Investor Group, are offering a 130 million dollar investment, which includes 90 million dollars of new equity and a 40 million dollar new term loan. American Apparel would be able to exit bankruptcy with 160 million dollars of liquidity and new equity, in addition to 50 million dollars of undrawn revolving credit facility, and 90 million dollars of equity cushioning at closing.

300 million dollar bid to buy American Apparel made

This proposed bid is an improvement over the 75 million dollars of equity cushioning they would have under the proposed reorganization plan filed by the debtor's. The 300 million dollar is above the valuation of 180 to 270 million dollars publicly stated by the debtor in their disclosure statement.

This bid is also looking very attractive to the lenders as well. Under the group's offer, the company's pre-petition senior lenders will receive a recovery of over 100 percent versus 33 percent to 77 percent under the debtor's plan, assuming the low and high values of the debtor's valuation range. Also, the unsecured creditors will receive a recovery of ten times that under the debtor's plan, as well as the benefits from the enhanced long-term viability of the enterprise.

In a statement, Chad Hagan, managing partner of Hagan Capital Group, said "American Apparel is a proven viable business model that needs to be scaled from a sales point of view and should not be in bankruptcy. If the Company is not turned around it will be a pointless loss of American manufacturing jobs. We strongly urge the creditors to evaluate and accept our offer."

He also voiced his support for Charney's return to the brand, saying that "Dov’s creativity, entrepreneurialism, and dedication are the cornerstone of American Apparel. Removing him from the Company’s board and leadership was a shortsighted mistake and we are seeing the results of this error unfold in the declining performance of the Company today.”

photo:wikipedia.org