Investor Group Announces $300 Mln Offer To Buy American Apparel

(RTTNews) - American Apparel, Inc (APP) said Monday that an investor group comprised of Hagan Capital Group and Silver Creek Capital Partners have submitted a $300 million offer to acquire American Apparel.

The Offer values 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.

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.

The acquisition proposal has the support of the Company's founder, Dov Charney, whose leadership and vision is central to American Apparel's long-term viability.

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 $130 million, including $90 million of new equity and $40 million of a new term loan. American Apparel would exit bankruptcy with approximately $160 million of liquidity and new equity, including cash, a new $50 million undrawn revolving credit facility, and $90 million of equity cushion at closing, versus approximately $75 million under the debtor's plan of reorganization.

The total enterprise value of the proposed transaction is $300 million, an attractive valuation to the debtor and above the valuation range of $180 to $270 million publicly stated by the debtor in its disclosure statement. The Investor Group's offer is an upward revision to a prior proposal submitted by the Investor Group to the Company in December 2015.

Under the Investor 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.