NY Post: American Apparel lender demands $10M loan repayment


A key lender to embattled American Apparel (APP) is demanding immediate repayment of a $10M loan, threatening a liquidity crisis for the retailer after the ouster of CEO Dov Charney, NY Post reports.

U.K.-based Lion Capital is said to have denied a waiver on a default triggered by Charney’s dismissal, forcing APP to raise funds to pay it off, either by issuing new debt or additional equity in the company.

APP’s debt structure has cross-default provisions that also will trigger a default on its $30M credit line with Capital One, potentially creating a cascading effect that could force a bankruptcy if it can’t line up funds, according to the report.

Comments (4)
  • TruetoMNKD
    , contributor
    Comments (26) | Send Message
     
    I was watching both APP(no position) and MNKD(long) via Time & sale windows yesterday when MNKD was hovering between $10.61 and $10.58. At the same precise time APP was at a stable .5195 bid .52 ask spread. I crazily thought to myself "This could be a gift. Sell my MNKD (-1%) and pick up APP (-22%) and then cross my fingers for a quick pop up in recovery for this morning.

     

    Well, of COURSE I did no such thing! To my chagrin APP closed today above .70, and I'm all sour grapes over it - until this! Can't say if I had made the trade yesterday that I would have kept the position in APP to the close today, but if I had done so, I would have deserved it for betraying my MNKD position. There is something to be said for staying the course.
    26 Jun 2014, 08:39 PM Reply Like
  • pierke301
    , contributor
    Comments (14) | Send Message
     
    and look now :-)
    28 Jun 2014, 09:28 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (11057) | Send Message
     
    Is there any way (APP) can get out of this debt trap without filing BK?
    28 Jun 2014, 10:27 AM Reply Like
  • TruetoMNKD
    , contributor
    Comments (26) | Send Message
     
    Well, you would think that the demand for payment would have affected the PPS, but the announcement by the ousted CEO's intent to purchase another 10% of APP has taken over the headlines. Also, the strangeness of MNKD dropping on the news of approval of Afrezza - if you ask me, It was a great bear raid that got interrupted by the sudden FDA announcement, heh, it couldn't have happened to nicer people! MNKD rose to $11.02 in AH trading, so Monday is where the short squeeze should begin .

     

    I think the debt trap can be avoided with a little sweet talking.
    29 Jun 2014, 11:49 AM Reply Like
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