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American Apparel delays FY reporting to rework lending

By Angela Gonzalez-Rodriguez

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Business

American Apparel Inc. has postponed the release of its annual financial report as it reworks a lending agreement to allow it to take on more debt provided by a hedge fund. However, the retailer provided estimated results for the past fiscal year.

The Californian retailer said Wednesday in a filing that it is still in discussions with Capital One Financial Corp. to change the terms of a credit facility and allow a 15 million dollars loan from Standard General. These 15 million dollars will be used to make a debt payment. On April 15, the company owes about 14 million dollars of interest on its bonds.

It is worthy a note that Standard General agreed to a 25 million dollars capital commitment last year in exchange for board seats, and used the first 10 million dollars to buy an American Apparel loan.

The apparel chain said in this regard it had 8 million dollars in cash at the end of last year and 13 million dollars of borrowing capacity under the facility with Capital One. By March 13, the available capacity declined to 6 million dollars.

Estimated FY14 sales drop 3.9 percent to 609 million dollars

Nevertheless, the retailer, sometimes more known for its struggles with flamboyant founder Dov Charney than for its fashion statements, reported some estimated annual results in the filing. Thus, sales fell about 3.9 percent to 609 million dollars, which implies a revenue dip of 9.2 percent to 153.6 million dollars during the fourth quarter, the steepest quarterly drop in four years, as highlights Bloomberg.

The retailer estimated that its annual net loss shrank to 69 million dollars, or 43 cents a share, from 106 million dollars, or 96 cents, a year earlier.

Meanwhile, talks over Irving Place Capital's proposal to buy the polemical retailer would be under the weather, according to Bloomberg. Sources closed to the matter quoted by the news agency said that New York private equity firm Irving Place, which offered last year to buy American Apparel for about 1.40 dollars a share, has "grown uncertain" about the company's valuation.

In this vein, it is worthy a recall that the stock rose to 1.14 dollars in December on news it was being sold, but has fallen since, closing to the 77 cents a share region earlier this week.

Besides, reports ‘Bizjournals’, Irving Place also was concerned that American Apparel's board was "more interested in raising capital and trying to turn around the money-losing chain than finding a buyer.”

American Apparel