Gildan Activewear Inc.’s purchase of American Apparel LLC has been approved.
The judge overseeing the company’s bankruptcy on Thursday gave the OK on the company’s sale to Gildan Activewear for a purchase price of $103 million, which includes the initial $88 million offer plus $15 million for inventory purchase orders. A closing date has not yet been set and could be subject to regulatory approvals.
Next Level came out of Monday’s auction as the backup bidder with an $86 million offer plus $16 million in purchase orders.
Smaller deals also struck during Monday’s bankruptcy auction, involving two landlords looking to buy back their leases in Chicago and Nashville from American Apparel, also received court approval during Thursday’s hearing. The combined purchase price of the two deals was $440,000.
A possible deal with Buffalo Exchange Ltd., the seller of used and vintage clothing, on a Chicago lease is still in negotiations.
The company is also looking to work out a potential deal with Broncs Inc. on its leases in Garden Grove, with the possibility of Broncs restarting the facility’s operations as a knit and dye house and possibly hiring back some of American Apparel’s former employees. The potential purchase by Broncs could yield at least $200,000 and could go as high as a $250,000 purchase price.
The Garden Grove facility counts 332 workers, according to an American Apparel filing with the state’s Employment Development Department. That’s a fraction of the 3,457 jobs spread across Orange County, the main downtown Los Angeles factory and South Gate the company warned in November as being potentially on the line.
An American Apparel spokeswoman reached Thursday declined comment on the status of the jobs and if a store closing process would commence across the company’s chain.
Gildan spokesman Garry Bell, also reached Thursday, confirmed the approved sale did not include the retention of jobs and where manufacturing of the American Apparel brand would take place has not yet been determined. The go-forward integration plan of the American Apparel business, he said, could come as early as the company’s next scheduled conference call Feb. 23.
“The jobs and any of the impacts of this bankruptcy are really on the bankruptcy and we’ve just had this opportunity to buy these assets as a result of this bankruptcy,” Bell said.
Store operations could continue for as long as the next 100 days, the term under which Gildan has extended a limited license for use of the American Apparel name. Whether there’s a resurgence of American Apparel brick-and-mortar in the long term under Gildan, it’s too early to say, Bell said.
“Retailing is changing so there’s a lot of moving parts and I think people in retailing are struggling to figure out how to properly position a brand,” he said. “The good news with this brand is it has a loyal, strong following. The brand strength is built on their vertical integration model. It was a brand that created this marketing aura about it that drew people in. Those are all things we’re going to consider as well as manufacturing. There are a lot of things to weigh as we take a look at all of this.”