Rowrrr!
Billionaire Ron Burkle, itching to get his paws on American Apparel, is being forced to tangle with Lion Capital over a proposed refinancing of the racy retailer, sources told The Post.
The Los Angeles retail tycoon got smacked down by Lion, a UK-based hedge fund that owns more than $80 million of American Apparel’s second-lien debt, in a recent bid to take over the company’s credit line, sources said.
That’s because Burkle is angling to enlarge the line to about $90 million — a move that would make him the biggest creditor, with a claim on the company’s assets ahead of Lion.
Lion has the right to reject any deal that lowers its standing as a creditor, and is expected to extract stiff concessions in exchange for approving a bigger credit agreement with Burkle.
The deal could still get done by the end of this month despite carrying a higher interest rate, as the company’s controversial founder and CEO, Dov Charney, is lobbying aggressively for it, according to people close to the talks.
“Burkle is desperate to get this deal done, and so is Charney,” said one source briefed on the negotiations, noting that Charney is looking to hike holiday marketing budgets and open new stores in Asia.
Currently, American Apparel has an asset-backed line of less than $60 million, provided by Bank of America.
“Lion knows that Burkle isn’t going to be a passive debtholder like BofA — he’s an aggressive investor who is ultimately looking for control,” according to a source briefed on the talks.
Comparable sales in October are on track to rise as much as 5 percent after a solid increase of 4 percent last month, according to a source close to the company.
Spokespersons for both Burkle and American Apparel declined comment.