American Apparel Inc. Tuesday said it snagged itself 11 days of breathing room to renegotiate its loan agreement with Lion Capital.

This story first appeared in the February 2, 2011 issue of WWD. Subscribe Today.

The company needed to show annual earnings before interest, taxes, depreciation and amortization, EBITDA, of at least $20 million on Monday or risk default on its loan, which could have caused millions to come due immediately and potentially bankrupt the company.

Lion waived American Apparel’s EBITDA covenant until the end of the day on Feb. 10.

“The company is discussing possible amendments to the Lion credit agreement to address its compliance with the specified covenant for future trailing 12-month periods, as well as making the credit agreement waiver permanent beyond Feb. 11,” the firm said in a Securities and Exchange Commission filing Tuesday morning.

The EBITDA threshold is scheduled to rise gradually, peaking at $80 million for the year ending in September 2013. As of Sept. 30, the company owed $125 million on its credit facility and the current portion of its long-term debt. Cash totaled $8.5 million.

The Los Angeles-based manufacturer and retailer of trendy basics saw shares gain 6 cents, or 5.8 percent, to close at $1.09, 34.3 percent below their $1.66 close on Dec. 31.

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