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Investor Group Makes USD 300m Bid for American Apparel.

M2 EQUITYBITES-January 13, 2016-Investor Group Makes USD 300m Bid for American Apparel


13 January 2016 - An investor group comprised of US private equity firms Hagan Capital Group and Silver Creek Capital Partners have submitted a USD 300m offer to acquire bankrupt Los Angeles-based clothing company American Apparel, Inc., the company said.

According to the principals, the offer valuing American Apparel at USD 300m is superior to a debtor's plan of reorganisation made for the struggling company.

The American Apparel investment would be managed by PressPlay Group, the private equity arm of San Francisco and Shanghai based PressPlay Global, which is backed by Hagan and Silver Creek.

The terms of the proposal includes an investment from the Investor Group of USD 130m, including USD 90m of new equity and USD 40m of a new term loan.

American Apparel would exit bankruptcy with approximately USD 160m of liquidity and new equity, including cash, a new USD 50m undrawn revolving credit facility, and USD 90m of equity cushion at closing, versus approximately USD 75m under the debtor's plan of reorganisation.

The total enterprise value of the proposed transaction is USD 300m, an attractive valuation to the debtor and above the valuation range of USD 180m to USD 270m publicly said by the debtor in its disclosure statement.

This offer is an upward revision to a prior proposal submitted by the same group to the company in December 2015.

Under the group's offer, the company's pre-petition senior lenders will receive a recovery of over 100% versus 33% to 77% under the debtor's plan, assuming the low and high values of the debtor's valuation range.

Additionally, the unsecured creditors will receive a recovery of ten times that under the debtor's plan, plus the benefits from the enhanced long-term viability of the enterprise.

Headquartered in Los Angeles, American Apparel operates the largest clothing manufacturing facility in the United States..

In 2014, the company generated over USD 600m of net sales and reported USD 40m of Adjusted EBITDA.

Cardinal Advisors, LLC is serving as financial advisor to Charney and Proskauer Rose LLP is serving as legal counsel to Hagan Capital Group and Silver Creek Capital Partners.

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Publication:M2 EquityBites (EQB)
Geographic Code:1U9CA
Date:Jan 13, 2016
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