American Apparel Inc. (APP) back from the brink, shares soar on cash influx

Posted on Monday, April 25th, 2011

American Apparel Inc. (AMEX: APP) shares rose nearly 21.2% at $1.50 Monday, after the clothing retailer received a cash infusion to keep the clothing retailer out of bankruptcy. Volume for the stock was nearly 3.5 million shares, dwarfing a daily average of 780,000.

The Los Angeles Times reported Friday that Canadian investors would invest more than $40 million, to help the trendy Los Angeles clothier — and its iconoclastic chief executive, Dov Charney — stave off a potential bankruptcy filing. After an $86-million loss last year and projections of another operating loss this year, the company has repeatedly warned investors about its ability to continue as a going concern.

“I don’t think the company necessarily needed to be saved,” Charney said. “There were a lot of options open to us. But this is a great investment.”

The investment group is headed by Michael Serruya, a prominent Canadian financier. “Our investment in American Apparel is as much a vote of confidence in Dov as it is to American Apparel,” Serruya was quoted in the Times piece.

American Apparel is a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel based in downtown Los Angeles, California. As of December 31, 2010, American Apparel employed approximately 11,300 people and operated 273 retail stores in 20 countries.

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