American Apparel Plan of Reorganization Confirmed by Court
- Company's transformation strategy to revitalize brand remains key focus
LOS ANGELES, Jan. 25, 2016 /PRNewswire/ -- American Apparel, Inc., (the Company), a manufacturer, distributor, and retailer of branded fashion-basic apparel, announced today that its amended prearranged plan of reorganization (the "Amended Plan" ) has been confirmed by the U.S. Bankruptcy Court for the District of Delaware (the "Court"). With the Court's approval, the Company is now focused on exiting Chapter 11 and fully implementing its strategy.
Paula Schneider, American Apparel's Chief Executive Officer, commented, "The confirmation of our plan is a great accomplishment for American Apparel. This is a new day for the Company, and a positive outcome for our customers, vendors and employees. With this milestone behind us, we are now fully focused on executing our turnaround strategy as we continue working to drive revenue across our wholesale, retail and e-commerce businesses; create innovative, new and relevant products; launch new design and merchandising initiatives; and continue to deliver innovative and inclusive award-winning marketing campaigns."
Upon the Amended Plan becoming effective, the Company's secured lenders will convert $230 million of secured debt into equity, provide $40 million of exit financing, in the form of debt and equity, and provide a $40 million asset-backed loan. This $80 million of incremental liquidity will support the turnaround plan, and interest expense will decrease by $20 million, Additionally, the Company will become privately-held.
Schneider added, "We would like to thank our investors, our customers, and our employees for their loyalty and support during our restructuring. I know we can work towards a new future for the Company and concentrate on what matters: making and selling great clothing, with a social conscience."
Andrew J. Herenstein, a co-founder of Monarch Alternative Capital LP, a member of the Committee of Lead Lenders, said: "We are pleased that the Amended Plan has been confirmed and look forward to continuing to partner with the Company's management team and all its stakeholders to build a better and stronger American Apparel."
American Apparel's legal advisor in connection with the restructuring is Jones Day. FTI Consulting serves as its restructuring advisor and Moelis & Company serves as its investment banker for the restructuring.
[American Apparel has a toll-free reorganization hotline, accessible to U.S. callers at: +1 (877) 940-7795 and international callers at +1 (614) 779-0360. Customers, employees, or other interested parties who may have questions related to the reorganization may call this hotline for more information. In addition, court filings and other documents related to the restructuring are available on a separate website administered by the Company's claims agent, Garden City Group at www.gardencitygroup.com/cases/AAI.
About American Apparel
American Apparel, Inc. (the "Company,") is a vertically-integrated manufacturer, distributor, and retailer of branded fashion-basic apparel based in downtown Los Angeles, California. As of January 10, 2016, the Company had approximately 8,700 employees and operated 218 retail stores in 19 countries including the United States and Canada. The Company also operates a global e-commerce site that serves over 50 countries worldwide at http://www.americanapparel.com. In addition, the Company operates a leading wholesale business that supplies high-quality T-shirts and other casual wear to distributors and screen printers.
Media Contact:
Weber Shandwick
Liz Cohen
(212) 445-8044
Arielle Patrick
(212) 445-8470
SOURCE American Apparel, Inc.
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