Seeking Alpha

Second largest American Apparel shareholder cashes out most of stake

  • American Apparel’s (APP) second-largest shareholder, FiveT Capital, has sold about 16.5M shares in the company, reducing its stake from 12.5% to 3.2%.
  • Johannes Minho Roth, founding partner of FiveT Capital, stated his concerns of the company's ability to pay bondholders (who hold about $210M of company debt), following the the ousting of CEO Dov Charney.
  • Lion Capital, a long-term lender of American Apparel, has already called in a $10M loan which is due today.
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Comments (14)
  • DeepValueLover
    , contributor
    Comments (8692) | Send Message
     
    The bondholders may see 30¢ on the dollar in court.
    4 Jul, 06:09 AM Reply Like
  • Kamil Kolacek
    , contributor
    Comments (833) | Send Message
     
    Let's how this $10m loan gets handled today before we pass any further judgement. With Standard General stepping in, I don't think that APP should have a problem with this relatively small cash call and they can focus on the $200m senior secured debt at 15%.
    4 Jul, 11:52 AM Reply Like
  • Travis Brown
    , contributor
    Comments (268) | Send Message
     
    I read the hedge (S.G.) will pay the debt and has back-up plan to pay all debts if need be.
    4 Jul, 02:26 PM Reply Like
  • Len Friedman
    , contributor
    Comments (54) | Send Message
     
    I wish I felt more optimistic but I may have screwed up really bad...a couple of days ago I picked up 2,000 shares figuring to ride the turbulence to the end of a rainbow. I'd done this last week and did well over two days. If AAP's debt isn't handled well---from my perspective--I'll be out close to two grand.

     

    Oh, well---it's still fun. And I'm not giving up yet.

     

    Send your donations, please. lol
    4 Jul, 09:50 PM Reply Like
  • Clayton Carmine
    , contributor
    Comments (40) | Send Message
     
    Set a stop limit, I don't think it'll go down all in one day. No position either way but it's on my watch list. I might buy a small speculative position.
    4 Jul, 11:29 PM Reply Like
  • the_value_vulture
    , contributor
    Comments (206) | Send Message
     
    Len,

     

    This is only a $10M loan. There will be some type of agreement between Lion and Standard. A permanent disagreement on the loan would put Lion's 24.5M of warrants in jeopardy when they are showing a gain of 5 million on Thursday's close. Lion doesn't strike me as this dumb

     

    I wouldn't say this is GGP 2.0 post bankruptcy, but material gains can be made on APP with the reworking of APP's capital structure and most importantly management changes that the company has been desperately needing for quite some time. Standard General sees the potential with the hedge fund now in the driver's seat.
    5 Jul, 08:05 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8692) | Send Message
     
    Doesn't Charney still control nearly half of the company?

     

    He can still be a big thorn to the board and bondholders, right?
    5 Jul, 11:05 AM Reply Like
  • Clayton Carmine
    , contributor
    Comments (40) | Send Message
     
    Yes, he could expose himself to the board and bondholders. :)
    5 Jul, 12:18 PM Reply Like
  • Len Friedman
    , contributor
    Comments (54) | Send Message
     
    That's hilarious.
    5 Jul, 08:59 PM Reply Like
  • Len Friedman
    , contributor
    Comments (54) | Send Message
     
    I especially like the colon at the end of your comment. Not too sure about the half-parenthesis. lol
    5 Jul, 09:02 PM Reply Like
  • Len Friedman
    , contributor
    Comments (54) | Send Message
     
    Of course you're right. And it would be insane settling for 30 cents on the dollar when the company would likely fetch a higher number if put on display at your local auction block. I saw this when I bought back in but between then and now all I can say is--well, the wife and I handed a check to a realtor. That's why I'm feeling kind of stupid for my sophomoric move. There's a time for cavalier trading moves and this ain't one of 'em.
    6 Jul, 09:03 PM Reply Like
  • djkidm
    , contributor
    Comments (416) | Send Message
     
    I have a question? Who did Five T Capital sell the 16.5 M shares to? On the open market? Throughout the quarter?

     

    Forgive me if it's a silly question, I'm just not sure how these types of things work? I was checking the daily volume of $APP this past couple weeks....

     

    Thanks anyone with any thoughts in advance :-)
    5 Jul, 08:47 PM Reply Like
  • Andre LaPlume
    , contributor
    Comments (259) | Send Message
     
    Is it possible they sold their shares to Charney? They must have taken quite a beating. If he gets control back watch out. He doesn't inspire much confidence...

     

    Out at 66 cents. Better to take a loss than to lose it all.
    7 Jul, 06:41 AM Reply Like
  • Len Friedman
    , contributor
    Comments (54) | Send Message
     
    It's highly doubtful that confidence, inspired or otherwise, will spell success or failure in this instance. It comes down to money to cover debt and management bent upon making certain that bills are paid.

     

    This is my second fling, now holding 2,000 shares at 92 cents. Made just a few bucks before, now with a $500 gain. I think this has legs, possibly to the $1.50 area before leveling off. Assuming the CEO is out, the hedge fund might provide decent leadership and bring the company to far loftier status than achieved thus far. I'm willing to be patient, perhaps stupid, but curious enough to take a chance.
    11 Jul, 09:46 PM Reply Like
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