American Apparel plans $80 million PIPE; CommScope to raise $83.25 million; Northfield on tap

By Stephanie N. Rotondo

Portland, Ore., March 13 - A couple of larger PIPE deals came to market on Friday, including one from American Apparel Inc. and one from CommScope Inc.

American Apparel announced that it would raise $80 million through a private placement of 15% secured second-lien notes. The deal also includes warrants for up to 16 million common shares.

CommScope will meanwhile raise $83.25 million by issuing convertible debentures, the company said. The notes can be converted into common stock.

Separately, Northfield Laboratories Inc. announced a registered direct offering of convertible preferred stock. The deal is expected to bring in about $1.4 million.

Elsewhere, Sunrise Real Estate Development Group Inc. said it negotiated a private placement of stock. The company will issue 57 million common shares to Whole World Holding Corp.

American Apparel arranges deal

American Apparel negotiated an $80 million private placement of 15% secured second-lien notes due Dec. 31, 2013, the company announced.

Interest on the notes, sold to Lion Capital LLP, is payable in cash or in kind. The company can call the debt at any time at par plus interest.

Also, Lion Capital received detachable warrants for 16 million shares. The warrants are exercisable at $2.00 until March 2016.

The company said that proceeds from the financing would be used to repay outstanding debt, including a second-lien credit facility with SOF Investments LP.

"We are excited that Lion Capital, a leading private equity firm in the consumer sector, has decided to make a substantial investment in American Apparel," said Dov Charney, American Apparel's chief executive officer, in a statement. "In light of unprecedented market conditions, we believe Lion Capital's investment serves as a strong endorsement of our company and the tremendous potential of our brand.

"This investment provides us with a long-term solution for our capital structure and an enhanced ability to grow our brand both domestically and internationally over the coming years."

"We are extremely pleased to have the opportunity to partner with Dov and the management team at American Apparel," added Neil Richardson, a partner at Lion Capital, in the release. "The strong growth of the brand over the last few years is a testament to Dov's vision and business acumen and we believe the company will continue that exciting growth into the future, both in the United States and around the world.

"American Apparel fits well with our focus of investing in strong, differentiated consumer brands, and we look forward to a successful and enjoyable collaboration with Dov and his team."

American Apparel's stock (Amex: APP) gained 85 cents, or 57.05%, to $2.34. Market capitalization is $140 million.

American Apparel is a Los Angeles-based manufacturer, distributor and retailer of branded fashion basic apparel.

CommScope's convertibles

CommScope, a provider of infrastructure solutions for communications networks, said it would raise $83.25 million in a private placement of convertible debentures, according to a regulatory filing.

The 3.5% convertible senior subordinated notes due March 15, 2024 are immediately convertible into common stock at a rate of 99.354 shares per $1,000 of debt, or an initial conversion price of $10.065 per share.

Furthermore, the company can redeem the notes on or after March 20, 2012. Noteholders can force repurchase of the notes on March 20, 2012, March 15, 2014 and March 15, 2019.

However, the company's existing senior secured credit facility restricts its ability to repurchase the debt for cash on March 20, 2012 and March 15, 2014.

Proceeds will be used to pay a portion of the redemption price on the company's 1% convertible subordinated notes due 2021, which have a redemption date of March 20. As of March 13, the Hickory, N.C.-based company had $175.5 million of the notes outstanding.

In an interview with Prospect News, Phil Armstrong, CommScope's vice president of investor relations, said that the deal - and the subsequent payment on its 1% convertibles - "enhances liquidity while preserving flexibility under our existing revolver." Armstrong noted that the due redemption will be paid in the week ahead.

Also, Armstrong said that the company paid down its revolver by $172 million on Thursday.

"It's a difficult environment," Armstrong stated. "Our stock is down meaningfully, like many other stocks. But we think it's a good deal in a difficult market."

CommScope's stock (NYSE: CTV) declined 64 cents, or 6.99%, to $8.51. Market capitalization is $610 million.

Northfield plans direct offering

Evanston, Ill.-based Northfield Laboratories plans to raise $1.4 million in a registered direct offering of convertible preferred stock, according to a press release.

The stock is convertible into common shares at $0.265 per share. Investors will also receive 5.4 million warrants, exercisable at $0.53 for four years.

The company expects to settle the deal led by Rodman & Renshaw LLC on March 18.

Northfield also said that the proceeds from the transaction would be used "for general corporate purposes, including general and administrative expenses and expenses in connection with the regulatory review of Northfield's PolyHeme investigative human hemoglobin-based red cell substitute product."

Northfield's stock (Nasdaq: NFLD) fell $0.0349, or 6.52%, to $0.5001. Market capitalization is $13.2 million.

Sunrise to sell stock

Sunrise Real Estate Development Group arranged a $20 million private placement of stock, the company said in a filing with the Securities and Exchange Commission.

The company will issue 57 million common shares to Whole World Holding Corp., the filing stated. The deal is expected to close on May 17.

Sunrise's equity (OTCBB: SRRE) last traded on March 2 for $0.51. Market capitalization is $12.1 million.

Sunrise is a real estate services company focused on the Chinese market.

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