Hi 98040! There's an interesting sentence in today's PR, I've read it over and over trying to interpret... It sounds like Mr. Charney is trying hard to get recovery for shareholders, especially since he's the largest... give it a shot and let me know what you think:
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DJ Ex-CEO Charney Makes Bid For American Apparel -- Update
Jan 07, 2016 20:15:00 (ET)
By Lillian Rizzo
Former American Apparel Inc. Chief Executive Dov Charney has found an investor to back a rival bid for the bankrupt retailer valued at more than $200 million, according to people familiar with the situation.
Mr. Charney's investor's identity hasn't been disclosed, but people familiar with the situation say it is a privately held company.
American Apparel filed for bankruptcy in October and is looking to swap about $200 million worth of debt for equity as part of its restructuring. Its plan would wipe out shareholders, including its largest, Mr. Charney.
Mr. Charney says his proposal would leave the company, which he founded in 1989, in better shape following its restructuring than the deal now on the table.
American Apparel would have total liquidity of some $170 million upon exiting bankruptcy under his proposal compared with $80 million under the company's current plan, according to a Thursday filing by Mr. Charney in American Apparel's bankruptcy case.
"The alternate proposal also offers an attractive valuation to the debtors within the stated valuation range of $180 [million] to $270 million," he said.
An American Apparel spokeswoman said it would consider all proposals but is focused on seeking approval of its chapter 11 plan.
"American Apparel evaluates all bids consistently, and in the ordinary course. The company remains focused on pursuing the completion of its financial restructuring following its planned bankruptcy court hearing at the end of this month," a company spokeswoman said Thursday.
A successful bid for American Apparel would have to exceed the $350 million to cover the money owed to the bondholders in the bankruptcy process, as well as pay off the $90 million in postbankruptcy financing and provide the $40 million of exit financing that is part of the company's chapter 11 plan.
The troubled retailer is slated to present its existing reorganization plan for bankruptcy-court approval on Jan. 20 and hopes to emerge from chapter 11 shortly thereafter..
Mr. Charney called the process for finding a buyer for American Apparel "flawed" in court papers, and alleged that prospective buyers were given insufficient timing to place a bid. He also says the current reorganization plan, which would leave him and other shareholders empty-handed isn't feasible.
"On its current path, American Apparel is profoundly in need of reorientation of its historic creativity, innovation and art," Mr. Charney said in his objection to the company's chapter 11 exit plan.
In early December, Mr. Charney announced he hired Cardinal Advisors to assist in him lining up investors that would keep him involved with the troubled retailer.
It is still unclear what role Mr. Charney would play at the company, the people added.
Mr. Charney was ousted from his position as chief executive in late 2104 amid allegations of sexual harassment and other misconduct, which he denies.
While American Apparel's financial position deteriorated under Mr. Charney's leadership, it worsened once he was ousted in December 2014. For the nine months ending Sept. 30, American Apparel lost $65 million on $385 million in sales.
Suzanne Kapner contributed to this article.
Write to Lillian Rizzo at Lillian.Rizzo@wsj.com
(END) Dow Jones Newswires
January 07, 2016 20:15 ET (01:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc
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