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American Apparel tells lender ex-CEO might come back

American Apparel is now in the lion’s den — Lion Capital’s, that is.

The cash-strapped clothing company’s bankers have told lender Lion Capital that it won’t be able to issue new debt to refinance a $10 million loan whose default was triggered June 18 when the board ousted CEO Dov Charney, sources told The Post.

That’s despite the retailer’s assurances to Lion and the public last week that it didn’t expect to have a problem refinancing the loan, whose default is threatening a liquidity crisis and a possible bankruptcy.

Reached Sunday, a source close to American Apparel said the company still believes it has the resources to pay back the Lion loan, possibly by selling additional shares.

But according to a source close to Lion, the tables have turned so drastically that American Apparel reps suggested to Lion over the weekend that Charney might return to the company in order to avert the crisis.

“They’re now saying that Dov might be back, which would cure the default,” according to a source close to the discussions.

As first reported by The Post last week, Lion has denied a waiver on a default provision that was triggered when the board staged a surprise coup against Charney, citing an internal probe into alleged misconduct.

Faced with a July 4 repayment deadline from Lion, sources said, company lawyers late last week had briefly disputed that the loan was in default. They argued that Charney has technically not yet been fired, but instead suspended for 30 days pending a cure period.

The company has since backed away from that argument, according to a source, and is looking to repay the debt with the help of adviser Peter J. Solomon, a New York investment bank.

A second alternative to raise emergency capital through selling new stock also could be difficult, sources said, with some questioning whether the company has enough registered shares to raise the money it needs.

According to securities filings, American Apparel has issued about 176 million out of 230 million authorized shares. The stock closed Friday at 97 cents.

Concerned that not enough authorized shares remain for the stock offering, company bankers proposed that Lion surrender millions of stock warrants that the British-based firm owns, according to one source.

Lion, headed by the shrewd financier Lyndon Lea, rejected that idea in discussions Sunday, according to a source close to Lion. Theoretically, that could leave the board with the option of increasing the company’s share authorization at a special meeting.

Lion might be persuaded to take shares under a new authorization, according to the source. But such a deal would likely require deeply discounting the shares. Lion, which historically has been supportive of Charney, would also likely demand seats on the board, the source said.

Elsewhere, the board is facing an attack from Charney himself, who on Friday disclosed he has partnered with investment firm Standard General LP to amass a controlling stake.

American Apparel responded Saturday by adopting an anti-takeover “poison pill” provision.