Three years after buying it out of bankruptcy, Versa Capital Management is seeking a new owner for the Avenue Stores LLC plus-size clothing chain, Bloomberg News reported yesterday. The investment bank Houlihan Lokey is running the sale process. Versa, a buyout firm in Philadelphia, turned around the once-struggling Avenue chain and is looking to capitalize on growing demand for plus-size clothing. Sales of the apparel totaled about $18 billion during the 12-month period ending in June, according to NPD Group. The market’s potential has attracted retailers like Target Corp., which rolled out a larger-size clothing line, Ava & Viv, this year.
American Apparel Inc. is seeking advisers to help craft a plan to restructure the company in bankruptcy court, Bloomberg News reported yesterday. The seller of T-shirts and casual-wear has made calls in recent weeks to advisory firms as it prepares to negotiate a bankruptcy loan with creditors to fund it through the process. The Los Angeles-based retailer said last week that it may not be able to continue its operations as a going concern for the next 12 months, even after lenders increased its credit line. A group of lenders, including American Apparel’s largest shareholder Standard General, boosted the credit line to $90 million from $50 million, according to a company statement.
Few investors in the beleaguered energy industry have suffered more this year than those who purchased Samson Resources Inc.’s bonds, Bloomberg News reported yesterday. Owners of Samson’s $2.25 billion of unsecured notes maturing in February 2020 have seen the value of their investments shrink 95 percent in 2015 through Friday to half a cent on the dollar. Samson, majority-owned by private-equity firm KKR & Co., announced Aug. 17 it will file for bankruptcy by Sept. 16. The company will propose a reorganization that would leave some bondholders, including Blackstone Group LP’s GSO Capital Partners, with almost nothing and hand over control of the restructured business to a group of senior lenders including hedge fund Silver Point Capital LP and private-equity firm Cerberus Capital Management LP.
The price of crude has plunged by almost 60 percent from its 2014 peak — and suddenly looks likely to stay low for months and maybe years to come, the Wall Street Journal reported today. American oil companies have stunned their global rivals by maintaining or even adding production as U.S. prices nose-dived from $100 a barrel to $70 late last year to, as of yesterday, just above $40. Even more surprisingly, the Saudis have actually increased their production in the face of falling prices, in what analysts say is a pre-emptive effort to keep competitors like Iraq from stealing customers in Asia. Between 2008 and 2015, American oil production rose by 75 percent, topping nine million barrels a day late last year.
With oil prices collapsing and companies in retrenchment, a federal auction in the Gulf of Mexico on Wednesday attracted the lowest interest from producers since 1986, the New York Times reported today. It was the clearest sign yet that the fortunes of oil companies are skidding so fast that they now need to cut back on plans for production well into the future. The auction, for drilling leases, attracted a scant $22.7 million in sales from five companies, but energy analysts said that came as no surprise on a day when the American oil benchmark price plummeted by more than 4 percent. For the first time since the recession, it is approaching the symbolic $40-a-barrel level. Last summer, it was above $100 a barrel. A glut on American and world markets is to blame for the depressed prices, but the unusually large daily decline occurred after the Energy Department, in a report, lowered its oil price projections and showed a considerable increase in inventories.
A quick exit from bankruptcy court may be the surest way back in for distressed companies, according to restructuring professionals at the 31st Annual Bankruptcy & Restructuring Conference of the Association of Insolvency & Restructuring Advisors, Bloomberg News reported yesterday. The professionals cited an increase in hedge funds and other alternative investors in the distressed-investing business for shortening the average length of time companies spend in court to less than a year in 2014. That compares with an average of nearly two years a decade ago, they said. “You saw some of the fast Chapter 11s coming out of bankruptcy with relatively high leverage recently, and some of them had to go back in again,” said Ronen Bojmel, head of restructuring at Guggenheim Securities LLC. The most significant driver of quick bankruptcy exits may be the move to alternative distressed investors due to an exit from the business by traditional banks because of regulatory tightening to curtail risk-taking, said panelists. They suggested that, because of the change in lenders, less operational restructuring work to make a company’s business more feasible in a long term is getting done in chapter 11. “They are not necessarily long-term investors,” Alan Holtz, managing director at AlixPartner’s turnaround and restructuring services group, said at the conference. “They want to move fast, clean up the balance sheet and move on.”
General Motors will announce a new round of plant investments today at its Pontiac Metal Center just as an independent report found the company's U.S. manufacturing employment reached its highest level last year since the 2009 bankruptcy, the Detroit Free Press reported today. This week local officials in Arlington, Tex., voted on incentives for a $1.2 billion expansion of the assembly plant that produces the Cadillac Escalade, Chevrolet Tahoe and Suburban and GMC Yukon. A study by the Center for Automotive Research in Ann Arbor, Mich., yesterday found that GM's total hourly and salaried employment in the U.S. rose to about 78,000 last year, up from 74,000 at the end of 2010, but still 15 percent below the 91,655 at the end of 2008, just as the financial crisis forced the federal government to aid GM and Chrysler.
