NEW YORK - Clothing maker American Apparel Inc said on Friday that it got about $80 million in financing from British private equity firm Lion Capital LLP.
American Apparel, which manufactures its clothes in Los Angeles and has stores in 19 countries, said the deal with Lion Capital involved secured second lien notes maturing Dec. 31, 2013.
The company said it planned to use the loan to repay outstanding amounts on an existing second lien credit facility with an affiliate of MSD Capital. It also plans to reduce the balance of its revolving credit facility, repay a portion of a shareholder note, pay fees and expenses related to the deal, and fund its working capital needs.
This investment provides us with a long-term solution for our capital structure and an enhanced ability to grow our brand both domestically and internationally over the coming years, Chief Executive Dov Charney said in a statement.
Under the deal, Lion Capital received warrants for 16 million shares of American Apparel stock with a strike price of $2 a share, or a 5 percent premium to their trailing 30-day average.
Exercising the warrants would translate to about an 18 percent stake in the company, whose shares closed at $1.49 on Thursday on the American Stock Exchange.
In addition, Neil Richardson and Jacob Capps of Lion Capital intend to join the retailer's board of directors, it said.
London-based Lion Capital, which focuses on consumer investments, has invested in Jimmy Choo [TOWBRJ.UL], Kettle Foods [KETFD.UL], Orangina Schweppes and Weetabix (WEEBF.PK). (Reporting by Martinne Geller in New York and Ratul Ray Chaudhuri in Bangalore; Editing by Mike Nesbit and Lisa Von Ahn)