Their day-glo leggings may be as ugly as sin and their founder a total creepster, but retailer American Apparel got a boost in trading yesterday after George Soros-backed firm Crystal Financial agreed to extend a new credit line of $80 million to the struggling hipster retailer.
American Apparel was a force to be reckoned with in the early-to-mid naughties, shilling all manner of hoodies, tutus, knee socks and other ephemera- labeled as Made in America- to edgy urban populations at a breakneck pace. But the end of the decade saw some financial strife for the once fast-growing firm, and some accounting troubles coupled with a worker eligibility issue that reduced the company’s efficiency caused significant revenue drops.
By late 2010, American Apparel risked defaulting on a credit line as it struggled to power through the many setbacks the retailer faced. Although the deal rumored with the George Soros-backed firm has yet to be confirmed to the public, according to the New York Post, shares surged on news of the credit extension for American Apparel. The paper says:
The credit agreement from Soros-backed Crystal Financial, which could be worth as much as $80 million, will immediately replace a $75 million credit line from Bank of America that matures in July, sources said… The deal could be announced as soon as this week, and comes as American Apparel has seen recent sales momentum. Since December, the retailer has reported comparable-sales gains of 11 percent each month.
The George Soros-backed Crystal Financial has not commented on the deal, but news of a credit extensions makes bankruptcy- which had been reported as a possibility- less likely for American Apparel.