Canadian apparel maker Gildan Activewear Inc. said Monday it agreed to buy intellectual property rights related to the retailer American Apparel's brand and certain of its assets for about $66 million in cash.
In addition, American Apparel filed for chapter 11 bankruptcy protection Monday, Gildan said in a statement. This comes less than a year after the beleaguered U.S. retailer emerged from a previous round of bankruptcy protection and weeks after a management shake-up.
American Apparel placed its British outlets into the equivalent of chapter 11 bankruptcy protection earlier this month.
Gildan said Monday it expects the deal with the Los Angeles-based clothing manufacturer and retail chain to create revenue growth opportunities.
The Canadian company will separately purchase inventory from American Apparel but won't be purchasing any retail store assets, it said in its statement.
The closing of the deal is subject to approvals by the American Apparel bankruptcy process and customary conditions, and is expected to occur during the first quarter of 2017, Gildan said.
American Apparel Chief Executive Paula Schneider left the company last month, less than two years after she was brought in to replace Dov Charney, the company's founder and former CEO, who was ousted in December 2014 over allegations of misconduct.
The company has long grappled with shrinking sales, an outsize store footprint as well as sexual-harassment litigation tied to Mr. Charney, who founded American Apparel as a wholesale T-shirt business in 1998.American Apparel filed for chapter 11 in October 2015 and emerged, after fending off a rival bid from Mr. Charney, in February as a private company under the control of its bondholders, including Standard General LP, Monarch Alternative Capital LP, Goldman Sachs Asset Management LP and Pentwater Capital Management LP.
--Patrick Fitzgerald contributed to this article.
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(END) Dow Jones Newswires
November 14, 2016 05:25 ET (10:25 GMT)
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