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January 6, 2017

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American Apparel faces choice of suitors

Source: Agencies | January 6, 2017, Friday | Print Edition

ONLINE retailer Amazon.com Inc and teen apparel store chain Forever 21 Inc are among the companies weighing offers to acquire bankrupt American Apparel LLC, people familiar with the talks said on Wednesday.

The bankruptcy auction of Los Angeles-based American Apparel, which made its branding theme “Made in the U.S.A”, will determine the future of a major clothing manufacturing plant in California, one of the most expensive US states in terms of labor costs.

Keeping jobs in the US has become a hot button political issue since the presidential election. Ford Motor Co on Tuesday reversed plans for a US$1.6 billion factory in Mexico and said it would add 700 jobs in Michigan after receiving criticism from President-elect Donald Trump.

Amazon and Forever 21, as well as California-based apparel maker Next Level Apparel and brand licensor Authentic Brands Group LLC, are in talks with American Apparel and its financial advisers about submitting offers ahead of a deadline today, the people said.

Any successful offer would have to top a US$66 million stalking horse bid by Canadian apparel maker Gildan Activewear Inc, which American Apparel agreed to when it filed for bankruptcy in November.

Gildan’s offer included an option to keep American Apparel’s plants in southern California, which employ about 3,500 workers, making American Apparel one of the biggest garment makers in the US.

But Gildan plans to preserve only some of the California production should its bid prevail, the sources said. Many of Gildan’s production facilities are in low-cost countries.

An outcome in the auction is likely next week, the sources said, asking not to be named because the talks are confidential.

A Gildan spokesman said in an e-mail on Wednesday that it is gathering all the information from its due diligence to best position itself in the auction.

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