A few months ago, we reported on the recent financial woes facing American Apparel. The L.A.-based manufacturer had been teetering on the edge of bankruptcy as it struggled with rising cotton prices and a host of other problems. But now a group of Canadian investors has come to rescue the purveyor of leg warmers, neon T-shirts and sparkly leggings, The Globe reports.
American Apparel has struck a $40-million (U.S.) deal of financing – including more than $14-million up front in exchange for shares – in order for Montreal-born designer and AA founder, Dov Charney, to prove himself. The group of investors helping to bail out AA include Delavaco Capital, a private equity firm run by Toronto financier Andrew DeFrancesco, and Michael Serruya, the Toronto creator of Yogen Fruz World Wide Inc. Speaking with The Globe, Charvey said: “What I have to prove here is that creativity wins.”
The new investment already seems to have paid off with American Apparel Inc., which jumped 17 per cent on Monday, closing at $1.58. It was only three weeks ago when AA shares hit an all-time low of 74 cents.
So, hipsters rejoice: the chain (and its semi-pornographic ads) has been given a second chance. And if AA still manages to let things slide, there’s always Urban Outfitters to fall back on. Oh, wait.