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Check Out Line: Lifeline for American Apparel?

June 14, 2010

underwear1Check out the expected financial lifeline at American Apparel.

Sources expect the company, known for its colorful T-shirts, spandex leggings and other edgy, “Made-in-USA” retro appeal, and its main backer, British-based private equity firm Lion Capital, to reach an agreement that will prevent American Apparel from a looming debt covenant breach.

Last month, American Apparel lost nearly half its value after announcing it might trip a second-quarter covenant on June 30.

American Apparel and Lion Capital did not comment.

The threat of default comes on the heels of an immigration probe and mass layoffs that led to a wide quarterly operating loss, shrinking margins and “highly uncertain” sales at American Apparel. That in turn has cast a shadow over founder and CEO Dov Charney’s long-term hold on his brainchild — a bastion of anti-establishment cool that advocates immigrant rights, sexual permissiveness and the power of a well-fitting, poly-cotton T-shirt.

Also in the basket:

UAW meets as union looks to claw back from crisis

U.S. gasoline prices down 11 cents a gallon-Lundberg

Sonia Rykiel Takes Aim at U.S. Market (WWD, subscription required)

(Reuters photo)

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