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American Apparel seeks rescue financing

American Apparel, the beleaguered US fashion chain, reportedly has to secure $10m (£6.1m) in rescue financing to avoid filing for bankruptcy.

The Wall Street Journal said the retailer has held talks with an individual investor who has expressed an interest in providing the company with equity. It was reported that American Apparel hoped to secure a deal as soon as this week. If the $10m (£6.1m) financing was secured then the retailer would still need to raise another $10m (6.1m) to $15m (£9.2m) to survive.

The retailer, which has 15 stores in the UK, said earlier this month that it may need to voluntarily seek protection under Chapter 11 of the US Bankruptcy Code if its performance did not improve.

American Apparel’s sales and net profits both dropped for the fourth quarter to December 31, which contributed to a 4.6% fall in full-year sales to $559m (£346.4m). It also reported a net loss of $86m (£53.3m) for the year.

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