NEW YORK (TheStreet) -- Shares of American Apparel Inc. (APP) are gaining by 3.77% to $1.10 in pre-market trading on Monday, following reports the apparel retailer's board received a letter from the British buyout firm Lion Capital, urging the company to explore its strategic options, including a sale, Reuters reports.
In the letter Lion Capital said it would nominate Lyndon Lea, one of the firm's founders, to American Apparel's board of directors, Lea was on the board previously, but stepped down in 2011.
Lion Capital is a former lender to American Apparel and has the right to nominate two of the company's nine board seats, Reuters added.
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The firm has warrants to acquire up to 12% of the company, Reuters noted.
The letter is currently being reviewed by the retailer's board and asks that the board create a committee that would focus on evaluating the company's options, sources told Reuters.
Previously, Reuters had reported that Irving Place Capital has made an offer of up to $1.40 per share for American Apparel, an amount the company deemed to be much too low.
Separately, TheStreet Ratings team rates AMERICAN APPAREL INC as a Sell with a ratings score of E+. TheStreet Ratings Team has this to say about their recommendation: