Shares of American Apparel Inc. (APP) fell to an all-time low of $0.55 Friday, after a report on Thursday that the company had hired a law firm to help it figure out its restructuring options. That was followed by a report that the firm's bondholders have hired their own adviser in preparation for the expected restructuring talks.
The company, which came public in 2007, has struggled with weak sales and massive debt for several years. At the end of September 2013, American Apparel listed long-term debt of around $212 million and less than $5 million in cash. The sum of its current assets at the time exceeded its long-term debt by just over $600,000.
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Same-store sales fell in January and total sales were also down. American Apparel blamed the weather. The weather did not cause online sales to drop 6%, however. The company's CEO attributed that to a shift in sales to the wholesale segment due to "significant sales growth from an online distributor."
CEO Dov Charney also denied Thursday's report that American Apparel had hired Skadden Arps, saying that the law firm has been the company's outside counsel for years and that it is a "mischaracterization" to claim the lawyers have been hired to offer help on restructuring.
Shares closed at $0.66 on Thursday and opened nearly flat Friday morning before diving to that new low of $0.55. The 52-week high is $2.40.