LOS ANGELES – Dov Charney is hedging his bets as the clock ticks on his window to regain control of American Apparel.
Two parties aligned with Charney have submitted non-binding bids for the company with two to three groups having executed non-disclosure agreements as they work with the company on due diligence, according to two sources familiar with the talks.
One source, who requested anonymity given the sensitive and ongoing nature of discussions, said Charney is working nonexclusively with at least four parties — one of which is a private equity firm and the others characterized as “less traditional players” in the space. The second source confirmed talks between at least one party and the company occurred Wednesday and access was granted to due diligence documents.
The specifics on the offers are unclear. An analysis conducted by Moelis & Co. that was disclosed in documents filed in U.S. Bankruptcy Court pegged the company with a valuation of between $180 million and $270 million.
Charney and a representative from Cardinal Advisors LLC, the Los Angeles investment firm he revealed this month he partnered with to explore potential purchase opportunities, declined comment Thursday.
American Apparel, which is on track to emerge from Chapter 11 bankruptcy Jan. 20, disputed the information.
“We can confirm that there has been absolutely no progress and there is no transaction to consider, as nothing more than indications of interest have been submitted,” a spokesperson said in a prepared statement. “American Apparel evaluates all indications of interest consistently, and in the ordinary course.”
Any deal would have to be approved by the company’s bondholders and American Apparel chief executive officer Paula Schneider appeared confident earlier this month that they would emerge owners of the reorganized company come January.
“I believe very, very strongly and there’s all the proof, too, that’s in our statements and in all of our filings, that the bondholders will own the company in a very short period of time. And I don’t think that there’s anything that’s going to change with that,” she told WWD earlier this month.
Charney has been vigorously fighting to get back into the company he founded and was fired from late last year for cause, although he has alleged multiple times now in court documents that his ouster was part of a scheme that involved former executives and New York hedge fund Standard General to get rid of him and sell the company.
The situation has resulted in multiple lawsuits involving Charney, Standard General, American Apparel, former and present company employees and board members. The drama came to a head in October when the retailer filed for Chapter 11.
Meanwhile, attempts to right the company continue to plod along with a plan that’s largely focused on improving product assortment.
The most recent numbers show there’s still more work to be done. Sales for the first nine months of the year slid 16 percent from the year-ago period to $384.7 million, according to company estimates filed to the Securities and Exchange Commission last month. American Apparel reported a net loss for the nine-month period of $64.54 million, up from $40.86 million a year ago.