New York City American Apparel said Friday that it will receive an $80 million investment from Lion Capital that could give the private-equity firm a nearly 20% stake in the company.
The investment is much needed, as American Apparel amended its revolving credit and second-lien credit facilities in December to extend maturities of the loans for three months while it looked for longer-term financing.
"This investment provides us with a long-term solution for our capital structure and an enhanced ability to grow our brand both domestically and internationally over the coming years," founder and CEO Dov Charney said in a statement.
American Apparel said it will use proceeds from Lion Capital's investment to retire the outstanding amount under its second-lien credit agreement with SOF Investments, LP-Private IV, an affiliate of MSD Capital.
Remaining funds will be used to lower the outstanding balance under its revolving credit facility, repay part of a shareholder note, pay fees and expenses related to the deal and for working capital purposes.
The private financing deal is targeted to close Friday.