NEW YORK (The Deal) -- FiveT Capital AG, a Switzerland-based asset management firm, has built up a 12.69% stake in American Apparel (APP), according to a regulatory filing Monday after the troubled apparel retailer succeeded in its latest fund raising attempt.
Los Angeles-based American Apparel raised $30.5 million by selling 61 million shares at $0.50 per share March 27.
FiveT got its stake in the company from purchasing 22 million shares from the offering's underwriter Roth Capital Partners LLC, a source said.
The investment firm is enthusiastic about the company's prospects and, so far, isn't expected to agitate for change, an industry source said. FiveT had been talking to management since it took its stake, observers said, something the firm said in its regulatory filing it was likely to do.
American Apparel did not respond to requests for comment. FiveT did not respond to an e-mail requesting further comment on its investment.
The investment through the share offering comes not a moment too soon. The company has been threatened with delisting by the New York Stock Exchange. It also had a $13.5 million interest payment due April 15 on $206 million in 13% senior secured notes due April 15, 2020.
With the latest investment not only will the debt payment be covered - as well as others due this year - but the company will also have funds to effect a turnaround.
A second source said that the capital, in addition to the $40 million in Ebitda American Apparel is expected to generate this year, will cover a total of $35 million in debt and interest payments due this year, plus allow it to make $10 million in capital expenditures. The source added, however, that American Apparel plans to try to renegotiate those debt and interest payments.