American Apparel Inc. announced its intentions of effectively going public last week as it plans to merge with Endeavor Acquisition Corp., with the deal expected to close during summer 2007. Under the merger agreement, Endeavor will acquire American Apparel and its affiliated subsidiaries for up to 32,258,065 shares of restricted Endeavor stock in addition to assuming up to $110 million of net debt outstanding, creating a one-time merger bonus pool of $2.5 million, and reserving up to approximately 2.7 million shares of additional Endeavor stock under a plan to be made available for issuance to American Apparel employees.
The combined company will operate as American Apparel and is expected to trade publicly on the American Stock Exchange. Founder and CEO Dov Charney will remain CEO, while core members of the American Apparel management team will also remain with the company.
American Apparel has the capacity to produce more than 1 million T-shirts per week and operates 143 retail locations in 11 countries worldwide. For the fiscal year ending Dec. 31, 2006, American Apparel is expected to generate sales of approximately $275 million and EBITDA of approximately $30 million. Sales and EBITDA profits have expanded nearly eight-fold since the 2002 fiscal year with consistent double-digit EBITDA margins from combined wholesale and retail sales.
