American Apparel restates $90 million asset-based credit facility

By Wendy Van Sickle

Columbus, Ohio, Aug. 17 – American Apparel, Inc. amended and restated its $90 million asset-based credit facility dated April 4, 2013 on Monday, according to an 8-K filed with the Securities and Exchange Commission.

New borrowings under the amended facility bear interest at Libor plus 700 basis points. Borrowings outstanding under the existing credit agreement will continue under the amended facility and bear interest at Libor plus 500 bps.

The facility increases the existing borrowing base formula by $15 million, but that increase cannot raise the borrowing base above $60 million. Amounts repaid under the amended facility cannot be reborrowed.

The facility matures on April 4, 2018 but is subject to a Jan. 15, 2018 maturity in limited circumstances.

Wilmington Trust, NA replaced Capital One Business Credit Corp. as administrative agent under the amendment.

The credit agreement contains financial covenants, including a minimum fixed charge coverage ratio and a maximum leverage ratio. Covenant violations existing at June 30 were waived under the amended facility.

Proceeds are to be used to redeem outstanding notes.

In conjunction with the amended facility, the company with consent of its majority noteholders also amended the indenture governing its outstanding 13% secured senior notes due 2020 to amend the definition of “maximum credit facility principal amount.”

American Apparel is a Los Angeles-based manufacturer, distributor and retailer of branded fashion basic apparel.

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