American Apparel Inc. has reached a preliminary deal with investment firm Standard General to receive $25 million in financing to bolster the clothing chain's finances, according to a person close to the negotiations.
The deal will help pay off a $10 million loan from investment firm Lion Capital, which made a formal demand for payment Monday.
It will also mean shaking up American Apparel's board, said the person, who spoke on condition of anonymity because of the sensitivity of the discussions. The pact is expected to be announced later Wednesday.
What remains to be seen is what role American Apparel's ousted founder and CEO Dov Charney will play.
On June, 18, the Los Angeles-based company's board fired Charney as chairman and suspended him as president and CEO, citing "alleged misconduct."