By  on December 22, 2008

Shares of American Apparel Inc. got a boost Friday after the firm said lenders granted it a three-month extension on debt due to mature next month, and that the retailer has seen promising holiday sales.

According to a filing with the Securities and Exchange Commission dated Friday, the Los Angeles-based firm received an extension of its credit facilities with lender SOF Investments, which now have a maturity date of April 20. The debt was due on Jan. 18.

“We are pleased to have secured these extensions to our loan maturities given the current difficulties in the credit markets,” said chairman and chief executive officer Dov Charney. “Our business has remained encouraging during the holiday season.”

Charney added the extension will give the company time to pursue longer-term agreements with its lenders or consider financing alternatives.

For the third quarter ended Sept. 30, the company listed total liabilities at $196.3 million.

The amendment to the SOF deal permits the company to raise additional equity and enter into up to $15 million worth of lease-buyback transactions, as well as increase its unsecured indebtedness. If the credit agreement is further extended, the company’s capital expenditures are limited to $9.3 million in the first quarter of 2009 and about $8.5 million over the rest of the year.

In order to secure the extension, American Apparel paid SOF a fee of $2.6 million and issued the lender warrants to buy one million shares of company stock at $3 a share. If the company fails to raise $16 million in financing by March 13, SOF is entitled to warrants to purchase another two million shares at the same price.

The company has a separate credit agreement with Bank of America that could become due March 21, 2009, if the SOF agreement is neither extended nor renewed.

American Apparel stock surged nearly 40 percent in midday trading Friday before closing at $2.30, up 3.1 percent.

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