Los Angeles billionaire Ron Burkle is reported to be considering taking over the fashion retailer’s USD 160 million debt load.
According to sources familiar with the company, Burkle won’t be pursuing American Apparel through his West Coast investment firm Yucaipa, but instead by backing an offer from Jason Taubman Kalisman, the heir to the Taubman real-estate empire.
One possible outcome is that a USD 84 million term loan from Lion Capital could be partly or entirely refinanced to a rate as low as 7 per cent, according to a person briefed on the talks, who confirmed “an offer is on the table.”
More immediately, Burkle and his investing partner are looking to take over a USD 75 million credit line, currently provided by Bank of America, sources said. That facility is heavily drawn down, with just USD 1.5 million in availability for additional borrowings as of last month, according to securities filings.
“This would give the company some extra breathing room, and (Burkle’s offer) is really a reflection that business has gotten better,” said one source close to the talks.
As American Apparel’s Ebitda has managed to stay on-track to surpass USD 20 million this year, whilst slashing its costs and improving efficiency at its Los Angeles factory, it is unclear whether CEO Dov Charney will accept Burkle’s offer.