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The clock is ticking a bit more loudly at American Apparel Inc.
Facing a $13.5 million interest payment and possible delisting by the NYSE MKT exchange next month, the company plans to offer $30.5 million in common stock to the public.
Shares of the company fell on Tuesday by 16 cents, or 21.8 percent, to close at 59 cents following the disclosure of the offering. They’ve traded at less than $1 since the firm disclosed details about its financing and was reported to have hired advisers to investigate restructuring possibilities on Feb. 21, when they hit a 52-week low of 55 cents.
The troubled Los Angeles-based vertical retailer said it would use the proceeds from the offering to fund working capital and for general corporate purposes, including a cash interest payment on its senior secured notes due next month. It has granted the underwriters a 30-day option to purchase about $4.6 million of additional shares to cover overallotments.
RELATED STORY: American Apparel Misses SEC Filing Deadline >>
Cash is in short supply. On Feb. 28, American Apparel had $4.9 million of cash on hand, down from $8.7 million on Dec. 31. Availability from the Capital One facility, $6.3 million at the end of last year, is down to $2.7 million.
The firm is also facing an April 15 deadline with the NYSE MKT exchange, which needs to see progress toward financial stability if it is to allow American Apparel to keep its stock listing on the exchange. Although sales improved through much of 2013, problems getting its new distribution center in La Mirada, Calif., online contributed to declines in comparable sales of 6 percent in December and 5 percent in January.
The filing of audited financial results for the fourth quarter and full year ended Dec. 31 had previously been delayed beyond the Securities and Exchange Commission’s March 15 deadline, and the company said Tuesday that it wouldn’t be completed until after the conclusion of the stock offering. In an update Tuesday, the company said it now expects a net loss for 2013 of $107 million, or about 97 cents a diluted share, down from its previous estimate of a net loss of $122.1 million but still nearly triple the 2012 loss of $37.2 million. Sales rose 2.7 percent to $634 million.
American Apparel currently has 111.7 million shares outstanding. Depending on market prices, the stock offering could add another 40 million to that count, without the provision for overallotment. Additionally, the company would need to address antidilution provisions contained in warrants issued to Lion Capital and, under certain circumstances, Dov Charney, chairman and chief executive officer.
In the company’s last definitive proxy, filed on April 30, Charney owned 43 percent of the company’s equity and Lion held 20 percent.