American Apparel, the clothing retailer, is near ato sell a 20 percent stake in the company to Lion Capital, a private equity firm that once owned Jimmy Choo, for about $80 million, people involved in the deal said on Thursday.
The deal is expected to be announced Friday. American Apparel is on the verge of defaulting on $16 million of debt owed to themogul Michael S. Dell that comes due a week from Friday.
The deal should breathe new life into American Apparel and help stabilize its business in the economic downturn. The company announced last month that sales at its stores fell 9 percent, the first monthly drop in the company's history. Shares of American Apparel have fallen from a high of $10.86 a share this year to $1.49 a share on Thursday because of anxiety about its ability to pay its debts.