American Apparel falls after saying it is low on financing

The future looks anything but bright for American Apparel, which noted in a Securities and Exchange Commission (SEC) filing Tuesday that it may not be able to raise the capital it requires for the next 12 months and that investors could suffer substantial or total losses.

Beleaguered branded apparel maker American Apparel Inc.

The company is already trying to avoid 20 lawsuits filed by company’s founder Dov Charney, who was ousted by board members over sexual harassment claims.

It’s not a good sign when a publicly traded company can’t release its official second-quarter earnings on time because of the expense involved in doing so. (APP) said Tuesday that it does not expect to have sufficient financing commitments to meet funding requirements for the next twelve months, without raising additional capital or entering into some other financing.

The retailer, which last year also delayed its second-quarter filings amid negotiations with its lenders, said it had identified potential violations of certain minimum financial ratios under its Capital One credit line as part of a customary review. The company said it expects second-quarter revenue to show a 17 percent drop to $134 million compared with a year earlier.

American Apparel has been in talks with Capital One and other financial stakeholders regarding potential waivers to such facility that may be required by such potential defaults.

American Apparel noted that failure to obtain such waivers could have a material adverse effect on its financial condition and results of operations.

Its net loss for the quarter is expected to be at $19 million, or about 11 cents per share, compared with $16 million, or about 9 cents per share, a year earlier. During that period, its market value shrank to $90 million from $540 million.