US: American Apparel sells stock to meet debt payments
American Apparel intends to use the proceeds to cover an interest payment
Basic clothing retailer American Apparel Inc has sold US$30m of its stock as it battles mounting losses and attempts to avoid being de-listed.
The company said yesterday (27 March) it had priced an underwritten public offering of 61,000,000 shares of its common stock at a price to the public of $0.50 per share.
The firm intends to use the proceeds of the offering to cover an interest payment of around $13.4m due 15 April.
American Apparel, which hasn't made money since 2009, last week revealed negotiations over financing will delay the filing of its annual report. The company said it was in the process of preparing its plan of compliance in response to a letter it received from the NYSE accusing it of failing to comply with the exchange's listing standards.
The group said it was actively pursuing several possible financing alternatives as a means to increasing its available cash to fund debt service requirements and operational needs.
Earlier this month, American Apparel revealed an increase in full-year sales but said it expects 2013 adjusted EBITDA to plummet as costs related to its new distribution centre weigh on earnings. It is forecasting adjusted EBITDA of between $7m to $9m as compared to $36.6m last year.
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