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[video] Vince Is Junk: Moody's

NEW YORK (TheStreet) -- The hottest fashion runway isn't at the tents in Lincoln Center, in Paris, or even Milan; it's on the floor of the New York Stock Exchange. Fashion companies are stumbling over each other to go public this year, reaping huge rewards for either the private equity firms or marquee names attached to business.

Apparel Holding Company (AHC) is the latest entry into the IPO market. AHC, also known as Vince, is a stable for several fashion labels including Rebecca Taylor, Sag Harbor and XOXO. It's looking to raise $180 million, as it prices the offering between $17 and $19 a share. While the company has grown rapidly, management has limited experience managing a company of this size and both CEO Jill Granoff and CFO Lisa Klinger have both only been with the company for one year.

Moody's recently rated the near $1 billion in debt of Vince LLC as B2, which is considered speculative and a high credit risk. Moody's is concerned that 61% of its business is concentrated with four customers, and is highly dependent on the company delivering fashion hits. As Heidi Klum says on Project Runway, "One minute you're in, the next you're out."

The initial public offering will help generate cash to pay some of its debt, with some of the proceeds going towards paying back Kellwood Company. Private equity firm Sun Capital acquired Kellwood in 2008. Kellwood (which picked up Vince in 2006) was an apparel company that sold to the likes of Sears Holdings (SHLD).

AHC filed its offering as an emerging growth company, with the company responsible for divulging only the last two years of its finances. That's probably a good thing, since it's lost money for the last three years. On top of that, it has restructured every year for the last three years in attempts to improve its operational efficiency.

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