Shares of the embattled American Apparel Inc. shot up 20.6 percent Friday, though there was no indication that chairman and chief executive officer Dov Charney had come any closer to getting a cash infusion that could help the company avoid bankruptcy.
The stock gained 16 cents to 95 cents, its highest close since March 31. More than 2.4 million shares traded hands, almost four times the usual volume.
Charney is said to be looking for a $10 million to $15 million infusion that could be crucial in keeping the firm afloat. American Apparel has been warning for months that it might not be able to continue as a “going concern.”
But both Bank of America and Bank of Montreal require that the “going concern” qualification be eliminated by April 30. If the company is compelled by accounting rules to reiterate the warning and is unable to secure waivers for the covenants, its loans will go into default, preventing it from making any additional borrowings. Other debts would also become due immediately.
Lion Capital, which stepped in to help the firm in 2009, was owed $81.2 million at the end of last year. By contrast, the company’s outstanding stock was valued at $74.1 million at Friday’s close.
In general, it was a sleepy day in the markets. The S&P Retail Index rose 0.3 percent, or 1.37 points, to 528.39, capping off a 0.4 percent gain for the week. The Dow Jones Industrial Average increased 0.5 percent, or 56.68 points, to 12,341.83 for the day, but fell 0.3 percent for the week.
International markets were in retreat for the week. The CAC 40 declined 2.2 percent in Paris and the FTSE 100 slipped 1 percent in London as the Nikkei 225 dropped 1.8 percent in Tokyo and the Hang Seng Index declined 1.6 percent in Hong Kong.