American Apparel taps investment bank to explore sale options
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London - Although the door may have closed on American Apparel bankruptcy the story continues on, as the retailer forges on with its restructure and reorganization plan. However, now things appeared to have taken a sudden twist (or perhaps not so sudden) as American Apparel is said to have hired investment bank Houlihan Lokey to explore options for a sale.
The bank is understood to have already been in contact with some potential buyers, according to sources familiar with the process, reported Women's Wear Daily. "As we have regularly communicated to employees, vendors and customers, we continuously evaluate strategic alternatives," said American Apparel, which is currently owned by its former creditor, said in a statement on the potential sale.
The sale proceeding comes a mere six months after the Los-Angeles based fashion retailer exited from Chapter 11 bankruptcy and follows on from the very public removal of American Apparel's founder and former Chief Executive Officer, Dov Charney. However, in spite of going through the motions of its approved business plan, which included the hiring of several new board members, numerous redundancies and the expansion of American Apparel's inventory , is seems as if the new owners have been unable to turn the tide.
American Apparel explores options for future sale
Nevertheless, the name American Apparel still retains its appeal within the fashion market and is likely to attract much interest. But not from Charney, who previously mounted an ineffective 300 million dollar bid takeover bid for, with the support from investors such as Hagan Capital Group and Silver Creek Capital Partners, late last year. "No one has contacted me yet, so I have no idea what the terms are," said Charney to FashionUnited on the phone on Thursday.
In addition, Charney added that he is currently busy developing a new apparel range, which also happens to be based in LA. In addition to news of a potential sale, American Apparel is also said to exploring options to exit its downtown LA manufacturing plant and relocating to a lower-wage area of the US. According to the New York Post, American Apparel is considering the possibilities of moving its production to a state such as North Carolina, South Carolina or Tennessee, which have a minimum wage of 7.25 dollars per hour. In time this would cut down on costs significantly, as California's minimum wage is set to rise to 15 dollars per hour in 2020.
In spite of American Apparel's unique positioning as one of the few fashion brands offering sweatshop-free, Made in the US apparel, the brand continues to flounder along. Following Charney unsuccessful attempt to take back American Apparel during its bankruptcy, the retailer's creditors, which includes Goldman Sachs, exchanged 230 million dollars of debt to equity and currently own the fashion retailer.However, it was always a question of how long American Apparel's creditors would be prepared to wait before trying to passing the retailer along and cashing out their invesment.
FashionUnited has contacted American Apparel and Houlihan Lokey for additional commentary.
American Apparel has seen its fair share of ups and downs over the last 2 and half years, since the dismissal of its founder and former CEO Dov Charney.
FashionUnited has pulled together the unfurling events which have taken place:
Timeline: The American Apparel saga continues with whispers of a sale.
Photos: American Apparel, Facebook