Elegant Game
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PLUS: ON THE FRIZZ: A roundup of ULTRA-SONIC the latest home frizz SONIC YOUTH’S KIM GORDON fi ghters that TALKS ABOUT HER UPCOMING mimic salon ART EXHIBITION. STYLE, PAGE 9 treatments. Page 8 AVOIDING THE BRINK American Apparel Gets Key $15M Cash Injection By DAVID LIPKE FRIDAY, APRIL 22, 2011 ■ WOMEN’S WEAR DAILY ■ $3.00 DOV CHARNEY HAS USED UP one more of his WWD nine lives. The controversial retailer on Thursday fi nal- ized a private placement of shares in American Apparel that gives the company breathing room on its burdensome debt and a cash cushion to fi - nance operations. The move averts a potential bankruptcy for the trendy Los Angeles-based com- pany, which has repeatedly warned in fi lings that it faced an imminent liquidity crisis. A group of investors led by Toronto-based Elegant Michael Serruya acquired $15.2 million in shares of American Apparel, at 90 cents each, a 27.4 per- cent discount to Thursday’s closing price of $1.24. The deal also includes warrants convertible to an- other $27 million in shares, also at 90 cents each, that are exercisable over the next 180 days. Game As part of the deal, American Apparel also To create his upcoming fragrance, Armani Code Sport, won a waiver from Bank of America on a cove- designer Giorgio Armani has bypassed the usual nant breach on a $58.2 million credit facility that could have immediately become due at the end sporty clichés and drawn inspiration instead from the of this month. seductive nature of athletic strength. The scent begins The strike price on the warrants in the fi nanc- its global launch this month, rolling out to the U.S. ing deal is well below where shares are currently trading, so are likely to be converted to shares, said market in August. Industry sources estimate it could sources close to the agreement, which would bring generate sales of roughly $30 million in its fi rst year yet more cash into American Apparel’s coffers. in the U.S. For more, see page 5. London-based Lion Capital, American Apparel’s largest lender, now holds additional warrants for about 32 million shares, also at a below-market price, following the awarding of ad- ditional warrants related to this latest fi nancing deal, said sources. Any large-scale conversion of warrants to shares SEE PAGE 4 IN WWD TODAY Zara Enters Australia PAGE 3 L RETAIL: The fast-fashion giant breaks into the Australian market with a store in Sydney and plans to open up to four more this year. Olivier Rousteing Seen at Balmain PAGE 2 FASHION: The key right-hand to Christophe Decarnin is said to be in prime position to take over the hot fashion house. Fingerhut Parent PAGE 3 PHOTO BY ROBERT MITRA; STYLED BY TYLER RESTY Plots IPO 2 WWD FRIDAY, APRIL 22, 2011 Union Group Alleges Global fashion Workers’ Rights Violations Rousteing Seen Stepping Up at Balmain with leading a house that Decarnin made synony- By KRisTi ellis By Miles socha mous with audacious, ultrasexy and ultraexpen- sive fashions, but one that may have tapped out its WashiNGToN — a global union federation representing garment PaRis — olivier Rousteing, a key deputy of bold-shouldered, rock ’n’ roll esthetic. industry workers released a report Wednesday night highlighting christophe Decarnin at Balmain, is in pole posi- Decarnin, a painfully shy designer, was absent alleged widespread workers’ rights violations in factories that tion to assume the creative helm of the French from Balmain’s fall-winter 2011 show last month, make sportswear and activewear for 59 major brands and retail- fashion house, according to market sources. under doctor’s orders. as reported, tensions be- ers and collectively employ 100,000 workers in three countries. Balmain is zeroing in on a contract and could re- tween the designer and Balmain’s chairman and The international Textile, Garment and leather Workers’ veal Rousteing’s appointment as early as next week. chief executive officer, alain hivelin, had reached Federation, a global union federation based in Belgium, said according to the designer’s posting on the profes- a breaking point after a five-year collaboration, it turned up the rampant violations through surveys conducted sional networking site linkedin, he has worked at with the two men said to have arrived at widely by its affiliate organizations in sri lanka, indonesia and the Balmain since 2009, and was at Roberto cavalli in divergent views on the fast-growing company’s Philippines in the fourth quarter of 2010. Milan for almost six years before that. a French na- strategy and future direction. The report did not name the factories or level specific allegations tional proficient in multiple languages, he is a grad- Decarnin, who spent seven years as head de- at any of the 59 retailers and brands that were listed in an annex. uate of the Paris fashion and art school esMoD. signer of women’s ready to wear at Paco Rabanne, Researchers in the three countries collectively interviewed WWD first reported on april 6 that Balmain quietly joined Balmain in 2005, steering a brand 100,000 workers at 83 factories and said they found a “litany” of was parting ways with Decarnin and would name synonymous with ladylike clothes into more hot- workers’ rights abuses with the most systematic violation they an internal candidate to succeed him. blooded fashion territory with thigh-skimming said being “widespread suppression of the human right to join or Promoting a number two has become a popular dresses, gauzy T-shirts and ornate embroideries. form a trade union by means of harassment, bribes, the failure to succession strategy in fashion in recent years as Balmain has since become one of the hottest renew short-term contracts and even factory closure.” the importance of star designers has waned. tickets during Paris Fashion Week, and its high The report also noted that none of the 83 factories provide a “liv- sources describe Rousteing as a young and prices have not prevented sellouts and waiting ing wage” to workers and many were forced to work up to 100 hours promising creative dynamo. he would be charged lists at many stores in recent seasons. of overtime a month, and were not paid the basic minimum wage. finanCiaL Companies Said Vying for Choo Stake loNDoN — Tamara Mellon was in london this “our bid has not died,” he said. “There are still 100,000 week, talking to potential purchasers of a majority a number of options on the table.” stake in Jimmy choo — which is still not officially a second round of bids is due in mid-May. Number of workers surveyed in ITGLWF study up for sale. last year TowerBrook retained Goldman sachs among the companies keen to purchase and Morgan stanley to explore long-term strategic on conditions faced by workers in factories TowerBrook capital Partners’ stake is TPG capital, options for choo, and the review will most likely in Sri Lanka, Indonesia and the Philippines. whose london office is run by the retail expert Philippe costeletos, co-head of TPG in europe. Meanwhile, the chief execu- tive officer of labelux, Reinhard Mieck, Workers in some of the 49 garment factories surveyed in the is spearheading his company’s bid, in tan- Philippines said they were “destitute” at the end of every month and dem with investcorp. Jones New York is some were forced to pawn their aTM cards for loans, the report said. also reported to be in the running, as is a in the most extreme cases, workers at one factory in sri fourth candidate — a private equity fund. lanka said they were forced to work 130 hours overtime, or all parties — including TowerBrook — three weeks’ worth of additional work, each month. in a factory have declined to comment. in indonesia, workers said management locked 40 people in an Meanwhile, a source close to choo said unventilated room for three hours at a time because they failed it is “unlikely” the current owners, which to meet production targets. include Mellon, will sell for less than 500 Temporary contract workers, comprising about 25 percent of the million pounds, or $810 million at current workforce covered, were the most likely to be exploited and were exchange. some industry insiders say paid even less than full-time workers, according to the report. that’s an optimistic price based more on “The multinational companies sourcing from these factories choo’s potential — in the asian market need to live up to their rhetoric and ensure that every single in particular — rather than on its current workplace in their supply chains complies with the national law successful performance. Revenues are and international labor standards,” said Patrick itschert, general about 150 million pounds, or $243 million secretary at the iTGlW F. at current exchange, and have more than ashling seely, policy assistant to itschert, said the iTGlWF held doubled since TowerBrook purchased the A majority stake in Jimmy Choo may be up for sale. a stakeholders’ meeting in sri lanka at the end of March with a company in 2007. handful of the companies named in the report to discuss the findings on Thursday, a spokesman for Daniel stewart, result in a sale, but it could also lead to an initial and find ways to resolve the problems. she said the involved parties the london-based investment bank and corporate public offering, according to sources. TowerBrook agreed to meet again in three months for further discussions. advisory firm, told WWD its interest was still very principals have been working alongside Mellon, seely said the iTGlWF did not name the factories or link much alive.