An American Apparel store located in Los Angeles, CA. (Dov Charney/Flickr)
FiveT Capital, American Apparel Inc.’s second-largest shareholder, has sold most of its stake in the clothing company, Reuters reports.
An asset management firm located in Zurich, FiveT Capital sold roughly 75 percent of its shares in the company, lowering its stake from 12.68 percent to 3.19 percent. According to the New York Times, Johannes Minho Roth, one of FiveT’s founding partners, said Thursday that several fears, some prompted by the ousting of CEO Dov Charney, led to the firm’s decision to sell.
Roth said he was uncertain about how the company would pay its bondholders, who currently hold around $210 million of American Apparel’s debt. Last week, one of the company’s lenders, Lion Capital, called in a $10 million loan which was due Friday; the loan was contingent upon Charney’s remaining as CEO, the Times said.
Meanwhile, Charney entered a partnership with the hedge fund Standard General last week, to accumulate a 43 percent stake in American Apparel. In doing so, Charney surrendered the voting rights on his shares, unless he obtains the investment firm’s approval, the Times said.
Roth told the Times that if American Apparel’s situation changes, FiveT may rebuild its stake. “We still believe the company has a lot of potential,” Roth said. “That’s why we didn’t sell everything.”