American Apparel to receive financing
NEW YORK – American Apparel Inc. has reached a preliminary deal with investment firm Standard General to receive a $25 million investment to bolster the clothing chain’s finances, a person close to the negotiations said Wednesday. The deal will help pay off a $10 million loan from investment firm Lion Capital, which made a formal demand for payment Monday. Lion Capital claimed that the chain defaulted under its credit agreement because it ousted its founder and CEO Dov Charney. The pact will also mean shaking up American Apparel’s board of directors, said the person, who spoke on condition of anonymity because of the sensitivity of the discussions. The deal is expected to be announced later Wednesday.
On June 18, the Los Angeles-based company’s board fired Charney as chairman and suspended him as president and CEO. His contract requires a 30-day period before he can be terminated.