Struggling apparel retailer American Apparel has received a new $300 million takeover bid from investors who support founder and ousted CEO Dov Charney.
Hagan Capital Group and Silver Creek Investors together say their bid is an upward revision from an earlier bid reported last week. While the first bid fell within the value range (between $180 million and $270 million) that the investment bank assessing potential bids has estimated in court documents, this one tops it.
Separately, American Apparel said all creditors had approved the terms of its reorganization plan, which has been sweetened with another $40 million in effort to, in part, give unsecured creditors pro-rata share of $2.5 million, up 150% from a previous plan. The company also said it “evaluates all bids consistently,” regarding the new takeover offer.
Along with their offer, Hagan and Silver Creek expressed confidence in American Apparel, saying that its brand was strong and that its problems are “operational,” going so far as to say that Charney’s “leadership and vision is central to American Apparel's long-term viability." They also argued that their investment would allow the retailer to recover what the newly approved plan would not.
“Offer valuing American Apparel at $300 million is superior to the debtor's plan of reorganization and is a win-win solution for the Company and all of its stakeholders,” the investor companies said in a statement. “Debtor's plan is not feasible and will lead to poor long-term recoveries for the Company's stakeholders and put thousands of manufacturing jobs in Los Angeles at risk.”
A bankruptcy court hearing is scheduled Jan. 20, and this situation sets up a potential showdown.