By early afternoon, shares had plummeted 19.2% to 61 cents. Trading volume of 1.9 million shares had surpassed its three-month daily average of 1.1 million.
The beleaguered teen apparel chain said it intends to use net proceeds to fund working capital and for general corporate purposes. The latter includes funding its April 2014 cash interest payment on senior secured notes.
The Los Angeles-based business said it will also grant underwriters a 30-day option to purchase up to an additional $4.575 million in common stock.
Roth Capital Partners will act as sole book-running manager, while Brean Capital is co-manager of the offering.
Must Read: Warren Buffett's 10 Favorite Stocks
TheStreet Ratings team rates AMERICAN APPAREL INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN APPAREL INC (APP) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."