UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): September 30, 2009
American
Apparel, Inc.
(Exact
Name of Registrant as Specified in Charter)
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Delaware
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001-32697
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20-3200601
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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747
Warehouse Street, Los Angeles, CA
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90021-1106
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (213) 488-0226
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01 Entry into a Material Definitive Agreement.
On
September 30, 2009, American Apparel, Inc. (the “Company”) entered into a waiver
(the “Credit Agreement Waiver”) to its Credit Agreement, dated as of March 13,
2009 (as modified by the Resignation, Waiver, Consent and Appointment
Agreement dated as of March 31, 2009, the “Lion Credit Agreement”), among the
Company, in its capacity as borrower, certain subsidiaries of the Company, in
their capacity as facility guarantors, Wilmington Trust FSB, in its capacity as
administrative agent and collateral agent, Lion Capital (Americas) Inc., as a
lender, Lion/Hollywood L.L.C., as a lender, and other lenders from time to time
party thereto.
The
Credit Agreement Waiver waives, for the period from September 30, 2009 to and
including November 14, 2009, the Company’s obligation to maintain a leverage
ratio of Total Debt to Consolidated EBITDA (as defined in the Lion Credit
Agreement) of no greater than 2.20:1.00 for the four quarter period ended
September 30, 2009 (the “Specified Covenant”).
Pending
the closing of its financial statements for the third quarter ended September
30, 2009, the Company is evaluating whether, in the absence of the Credit
Agreement Waiver, it was in compliance with the Specified
Covenant. The Company anticipates that, based on its current
operating plan for the remainder of 2009, it may exceed the maximum
leverage ratio permitted under the Lion Credit Agreement for the four quarter
period ending December 31, 2009. The Company is discussing possible amendments
to the Lion Credit Agreement to address its compliance with the leverage ratio
covenant in future quarters. The Company is also in discussions with
respect to making the Credit Agreement Waiver permanent beyond November 14,
2009. However, the Company can provide no assurance that it will be
able to secure such amendments or extension nor, if secured, the terms
thereof.
Under
the terms of its revolving credit agreement with other lenders and Bank of
America, N.A., as administrative agent (the “BofA Credit Agreement”),
noncompliance with financial covenants (including the Specified Covenant) under
the Lion Credit Agreement constitutes an event of default under the BofA Credit
Agreement. An event of default under the BofA Credit Agreement which
is not waived would block the Company from making borrowings under its revolving
credit facility, in which case the Company would have to obtain additional
liquidity. An event of default under the Lion Credit Agreement and/or
the BofA Credit Agreement could result in all indebtedness thereunder being
declared immediately due and payable, in which case the Company would have to
obtain additional sources of liquidity. There can be no assurance
that the Company would be able to obtain additional sources of liquidity on
terms acceptable to the Company, or at all, or that our assets would be
sufficient to repay in full our obligations under our debt
instruments. The acceleration of any or all amounts due under the
Lion Credit Agreement or the BofA Credit Agreement or the loss of the ability to
borrow under the BofA Credit Agreement would have a material adverse impact on
the Company’s operations which would result in the need for the Company to
modify its current business plan and/or curtail its operations and could affect
the Company’s ability to continue operations as a going concern.
The
foregoing description of the Credit Agreement Waiver does not purport to be
complete and is qualified in its entirety by reference to the Credit Agreement
Waiver, which is filed herewith as Exhibit 10.1 and incorporated herein by this
reference.
Item 9.01 Financial
Statements and Exhibits.
(d) |
Exhibits. |
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10.1
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Waiver
to Credit Agreement, dated as of September 30, 2009, among American
Apparel, Inc., the facility guarantors from time to time party thereto,
Wilmington Trust FSB, as the administrative agent and the collateral
agent, Lion Capital (Americas) Inc., as a lender, Lion/Hollywood L.L.C.,
as a lender, and other lenders from time to time party
thereto.
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Signature
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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AMERICAN
APPAREL, INC.
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Dated:
October 6, 2009
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By:
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Name:
Adrian Kowalewski
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Title: Executive
Vice President and Chief Financial
Officer
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EXHIBIT
INDEX
Exhibit
No.
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Description
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10.1
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Waiver
to Credit Agreement, dated as of September 30, 2009, among American
Apparel, Inc., the facility guarantors from time to time party thereto,
Wilmington Trust FSB, as the administrative agent and the collateral
agent, Lion Capital (Americas) Inc., as a lender, Lion/Hollywood L.L.C.,
as a lender, and other lenders from time to time party
thereto.
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