Ron Burkle already owns 6% of American Apparel (NYSE: APP). There are reports that he may buy a large portion of the retailer’s debt via financing an offer by Jason Taubman Kalisman, a member of the Taubman real estate family. The precise target would be $160 million in American Apparel debt. The company is in enough trouble so that ownership of the debt may be the key to control of the public corporation.
According to The New York Post, “Burkle and his investing partner are looking to take over a $75 million credit line, currently provided by Bank of America.”
The rumor is probably not true, because Burkle is not that dumb. American Apparel trades at $.90 down from a 52-week high of $1.90. The firm was on the brink of bankruptcy earlier this year. American Apparel has also received notice from the NYSE Amex Exchange that it is not within listing requirements.
On the positive side, perhaps, American Apparel said it would set up an online store with Ebay (NASDAQ: EBAY). It is impossible to say what this is worth.
American Apparel’s stock has remained below $1 for much of the last three months. No amount of news which might be perceived as good has pushed shares permanently higher.
The company lost $213,000 on revenue of $132.8 million in the second quarter.
Ron Burkle is not looking at American Apparel. He is not that stupid.
Douglas A. McIntyre