Friday, November 9, 2007

American Apparel Going Public (Kinda)

Endeavor Acquisition Corp. (AMEX: EDA), a blank-check company, has revised its offer for American Apparel due to the fact that sales and earnings at AA have increased significantly since the original buyout offer was made. Dov Charney, American Apparel's quirky founder, has some newfound reasons to smile, as the agreement brings his annual salary from $1 to $750,000, includes a $100 million life insurance policy, more than triples the amount of shares to be given to AA employees, and allows Charney to hold on to his 55% share of the company. Also, the debt ceiling pre-transaction has been raised from $110 million to $150 million, as American Apparel needs the money to finance the company's huge expansion. Another new inclusion in this deal is that Endeavor will purchase all of the shares owned by the other American Apparel shareholder, Sang Ho Lim, for approximately $67.9 million in cash when the deal closes.

The special meeting of stockholders to consider the transaction is expected to be held Wednesday, December 12, 2007. With the approval of Mr. Charney, the founder and controlling shareholder, this deal is pretty likely to go through, barring any last-minute drug-fueled reconsiderations. Watch out for big moves in Endeavor stock in the next month or two.

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