USA/UK - Lion Capital provides $80m loan to American Apparel

Lion Capital will provide the funding in exchange for warrants for 16 million new shares of the company with a strike price set at $2, representing a 5% premium to the 30-day trading price. Should Lion Capital choose to exercise its warrant, it would receive an 18% stake in American Apparel, in return for an additional capital injection of $32m in the business.

The loan will allow the company to pay off a $51m loan from SOF Investments, an arm of MSD Capital, which is controlled by Michael Dell, CEO of Dell Inc.

The $80m loan runs for five years and has an interest rate of 15%. American Apparel's share price closed at $2.50 on 13 March 2009.

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