American Apparel Gets $300 Million Buyout Offer
- BY: LUCY SYMONDS
- Jan. 20, 2016
American Apparel Inc. has received a USD$300million takeover bid from an investor group that would bring back controversial founder Dov Charney to the bankrupt clothing chain. The proposal came the same day the retailer’s intent of filing bankruptcy was accepted by its stakeholders.
The investors backing the offer were announced as Hagan Capital Group and Silver Creek Partners. In statement released Monday, the investor groups said their proposal was “superior to a bankruptcy plan that would hand ownership of the company to bondholders” announced in October. The current bid represents an increase from an earlier proposal backed by Charney which saw American Apparel Inc. receive a takeover bid of more than $200 million.
Charney, who was fired from the company in 2014 for alleged misconduct would make a surprising and possibly controversial return to the brand in some capacity if the offer is accepted. Charney was ousted as CEO after details allegedly emerged of the misuse of corporate funds and violations of the company’s sexual-harassment policy.
Chad Hagan, managing partner of Hagan Capital, said “Dov’s creativity, entrepreneurialism and dedication are the cornerstone of American Apparel- removing him from the company’s board and leadership was a shortsighted mistake, and we are seeing the results of this error unfold in the declining performance of the company today.”
Despite the offer, American Apparels current management is moving forward with its bankruptcy plan. The company reportedly has unanimous approval of all voting classes to accept that transaction, including a commitment for $40 million more in capital.
Dov Charney founded American Apparel in 1998 and built the company on foundations of domestic manufacturing and classic American aesthetic. In late 2006 American Apparel was listed on the American Stock Exchange and is one of the few clothing companies exporting “Made in America” goods.