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Friday, December 2, 2022

American Apparel Inc (OTCMKTS:APPCQ) Heats Up

American Apparel Inc (OTCMKTS:APPCQ) has seen a massive surge in price and volume off its $0.023 lows after founder Dov Charney said he is exploring plans with investors and industry executives in an effort to develop a value-maximizing solution for the Company, its thousands of manufacturing, retail, administrative and creative employees, its customers, as well as the Los Angeles community where American Apparel is one of the largest private sector employers.

APPCQ filed for bankruptcy protection in October its business crippled by debt, a huge fall in sales, employee strife and a drawn-out legal battle with their founder, Dov Charney. Prior to bankruptcy APPCQ developed a deal that cut debt by giving itself to creditors owed about $200 million.

American Apparel Inc (OTCMKTS:APPCQ) is a vertically-integrated manufacturer, distributor, and retailer of branded fashion-basic apparel based in downtown Los Angeles, California. As of September 30, 2015, the Company had approximately 9,000 employees and operated 227 retail stores in 19 countries including the United States and Canada.

The bankruptcy filing came after five years of steady losses that topped $340 million with another $45 million lost this year. The final straw was a $13.9 million interest payment due on Oct. 15 that the Company was unable to pay.

The Company’s founder Dov Charney was recently fired as CEO for alleged misconduct, including misusing company funds and failing to stop a subordinate from creating blog posts that defamed former employees. He will be the biggest loser here as along with other shareholders, his stake in the company will be wiped out, according Neil Saunders, chief executive of research firm Conlumino.

According to many the bankruptcy filing makes American Apparel an attractive acquisition target. CEO Paula Schneider said the company was not looking to sell at any point soon. “My understanding is that bondholders are interested in owning the company.”

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Earlier this year new CEO Paula Schneide said “We are committed to turning this company around. Today’s announcements are necessary steps to help American Apparel adapt to headwinds in the retail industry, preserve jobs for the overwhelming majority of our 10,000 employees, and return the business to long-term profitability. Our primary focus is on improving the processes and product mix that have led to steep losses over the past five years. Our customers, employees, and local communities around the world believe that American Apparel is an iconic brand that deserves to succeed. My job is to make that a reality.”

On December 4 APPCQ founder and former Chairman and CEO Dov Charney announced he is exploring plans with investors and industry executives in an effort to develop a value-maximizing solution for the Company, its thousands of manufacturing, retail, administrative and creative employees, its customers, as well as the Los Angeles community where American Apparel is one of the largest private sector employers.

Mr. Charney founded American Apparel in 1989 and was Chairman and CEO of the Company until June 2014, and served as a consultant until December 2014. American Apparel filed for bankruptcy in October 2015, a little over a year after Mr. Charney’s departure as CEO of American Apparel, and ten months following his departure from the Company.

Mr. Charney is confident that new and existing investors, working with him and his team of industry leaders, would be able to realize significant long-term value for American Apparel’s stakeholders, including its thousands of employees, by reviving American Apparel’s sales and profitability, while preserving and creating fair wage job opportunities in the apparel industry. Mr. Charney has engaged Cardinal Advisors, LLC as financial advisor in connection with an evaluation of strategic alternatives involving American Apparel.

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Currently trading at a $5.8 million market valuation APPCQ has been making a big move up after founder Dov Charney who owns 42% of the commons stock announced he is exploring plans with investors and industry executives; there is nobody more eager for APPCQ to emerge out of reorganization with the commons intact. We will be updating APPCQ as events unfold so make sure you are subscribed to Microcapdaily so you know what is going on with APPCQ.

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Disclosure: we hold no position in APPCQ either long or short and we have not been compensated for this article.

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