Investor group offers to buy American Apparel for $300 million: UPDATED

(Reuters) — Bankrupt teen apparel retailer American Apparel Inc (APPCQ.PK) received a $300 million bid on Monday from a group of investors who are backing the return of the company’s controversial founder, Dov Charney.

Hagan Capital Group and Silver Creek Capital Partners said their proposal included $90 million of new equity and a $40 million term loan, and backs a business plan from Charney, who was fired as chief executive in December 2014.

The enterprise value of the deal is above the valuation of $180 million-$270 million “publicly stated by the debtor in its disclosure statement,” the firms said.

Los Angeles-based American Apparel operates 218 stores in 19 countries, and established its reputation with sexually charged advertising and U.S.-based manufacturing in an era of offshore factories.

The company said that while it remains focused on completing its bankruptcy exit plan, it acknowledged it had received the Hagan proposal.

“American Apparel evaluates all bids consistently,” a spokeswoman for the retailer said in an email.

The Hagan proposal sets up a possible showdown at a Jan. 20 hearing in the U.S. Bankruptcy Court in Wilmington, Delaware. American Apparel must convince Judge Brendan Shannon its plan is fair and feasible, and Charney has objected.

American Apparel said on Monday all creditor classes voted in favor of its plan, which would bring the retailer out of bankruptcy under the control of its lenders, a group that includes Monarch Alternative Capital.

A lawyer for the official committee of unsecured creditors said he was studying the Hagan proposal.
“From unsecured creditors’ side the amount of money they put on the table is interesting, but the devil is always in the details,” said David Posner, of Kilpatrick Townsend & Stockton.

The company also said it amended its plan to increase the payment to unsecured creditors to $2.5 million, up 150 percent from the payment that was provided in the prior chapter 11 plan.

Under the new plan lenders would also forgo a claim of nearly $150 million, which would significantly increase the amount of money left for low-ranking unsecured creditors.

If the lenders pursue that claim under the Hagan plan, Posner said unsecured creditors might not be any better off, even with a higher offer.

American Apparel, which has not been profitable since 2009, filed for bankruptcy in October, joining a list other teen-focused retailers including Wet Seal and Body Central Corp that have struggled with changing tastes.

Charney founded American Apparel in 1989, but was fired in December for allegedly misusing company funds and failing to stop a subordinate from defaming former employees. He has denied the allegations.