Los Angeles-based American Apparel Inc. said Friday it had been warned by the New York Stock Exchange earlier in the week that it was in danger of being delisted.
The company’s shares were off about 10 percent in after-hours trading on the news to $0.15 for a market value of $28.20 million.
American Apparel said in a filing with the Securities and Exchange Commission that it received notice by the NYSE it had fallen out of compliance with one of the board’s standards because “it has sustained losses which are so substantial in relation to its overall operations or its existing financial resources or its financial condition has become so impaired that it appears questionable, in the opinion of the exchange, as to whether the company will be able to continue operations and/or meet its obligations as they continue to mature.”
The possibility of a reverse stock split was also raised by the NYSE because “it is concerned that the company’s common stock may not be suitable for auction market trading due to its low selling price,” the SEC filing said.
American Apparel said it has begun work on a report to the NYSE that will detail how it intends to regain compliance. The deadline for the plan is Oct. 9. It’s also on the hook for listing fees, which are due to the NYSE by Nov. 7.