This is a rough calculation of the amount of cash we believe American Apparel will have on hand at year end 2014. Our Investment Thesis should be updated with these metrics. We assume the ABL usage constant for the rest of 2014.
3/31/2014 cash = $16.7 million
2014 EBITDA guidance = +$45 million
2014 EBITDA efficiency gain (Source: Internal calculation) = +20 million
2 bond cash interest payments = -$31 million
Cash interest payment on ABL = -$1 million
Capital Expenditures for reminder of 2014 (Source: Amendment to credit line 3/25/2014) = -$4 million
Decrease in Inventory = +$19 million
Total Cash as of 12/31/2014 = +$65 million (Very rough estimate)
This does not account for incremental sales contribution above sales guidance.
Written by Michael Bigger.
Disclaimer: Bigger Capital, LLC, Bigger Capital Fund, LP, Bachelier, LLC and the Bigger family own more than 3.27 million shares of American Apparel. American Apparel is a highly distressed situation and it is not suitable for the majority of investors. The likely outcome of an investment is a loss of principal. In other words, the probability of losing all your investment in this situation is very high. We have been purchasing American Apparel since May of 2011 and we have nothing to show for it. Take our opinions with a grain of salt and do your homework. None of the Bigger entities individually or in aggregate have an obligation to file its position with the SEC at the time this article was published.