American Apparel skids after saying it doesn't have enough funds for the next 12 months

MarketsAssociated Press

Shares of American Apparel are plunging Wednesday after the company said it doesn't have enough financing to keep operating for the next year, meaning it will need to raise money or find new financing.

The Los Angeles company also says it may be out of compliance with the terms of its revolving credit facility and is in talks with Capital One about changing the terms of the credit facility.

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Its shares fell 7 cents to 14 cents in midday trading. Its market capitalization stands at about $24 million.

American Apparel Inc. has reported years of losses and falling sales, and it's being sued by founder and ex-CEO Dov Charney, who was fired in December following allegations that he had violated the company's sexual harassment policy. Charney denies the charges.