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Greece requests euro zone loan extension, offers big concessions

* Athens uses vital EU wording to request extension

* Euro zone officials to discuss whether letter meets terms

* Greek bailout deal due to expire on Feb. 28

* State faces running out of cash by late March – source

* ECB raises emergency funding for Greek banks only modestly (Adds Dijsselbloem confirms euro zone ministers to meet Friday)

By Renee Maltezou and Jan Strupczewski

ATHENS/BRUSSELS, Feb 19 (Reuters) – Greece formally requested a six-month extension to its euro zone loan agreement on Thursday, offering major concessions as it raced to avoid running out of cash within weeks and overcome resistance from sceptical partners led by Germany.

With its EU/IMF bailout programme due to expire in little more than a week, the government of leftist Prime Minister Alexis Tsipras urgently needs to secure a financial lifeline to keep the country afloat beyond late March.

Euro zone finance ministers will meet on Friday afternoon in Brussels to consider the request, the chairman of their Eurogroup, Jeroen Dijsselbloem, said in a tweet.

That raised hopes of a deal to avert possible bankruptcy and a Greek exit from the 19-nation currency area.

A government official told Reuters that Athens had asked for an extension to its “Master Financial Assistance Facility Agreement” with the euro zone. However, he insisted the government was proposing different terms from its current bailout obligations.

Greece had committed to maintain fiscal balance during the interim period, take immediate reforms to fight tax evasion and corruption, and measures to deal with what Athens calls its “humanitarian crisis” and kick-start economic growth, he said.

In the document seen by Reuters, Greece pledged to meet its financial obligations to all creditors, recognise the existing EU/IMF programme as the legally binding framework and refrain from unilateral action that would undermine the fiscal targets.

Crucially, it accepted that the extension would be monitored by the European Commission, European Central Bank and International Monetary Fund, a climbdown by Tsipras who had vowed to end cooperation with “troika” inspectors accused of inflicting deep economic and social damage on Greece.

The six month interim period would be used to negotiate a long-term deal for recovery and growth incorporating further debt relief measures promised by the Eurogroup in 2012.

Euro zone partners have so far said Athens must comply with the terms of the current bailout, which require it to run a 3 percent primary budget surplus this year, before debt service payments.

Senior euro zone officials were due to hold a teleconference later on Thursday to discuss the Greek application.

The wording chosen could help to satisfy at least some of the concerns that have held up agreement over the past two weeks, allowing Athens to avoid saying it is extending the current programme that it opposes while creditors can avoid accepting a “loan agreement” without strings attached.

Crucial details remain to be clarified on the fiscal targets, labour market reforms, privatisations and other measures due to be implemented under the existing programme.

Government spokesman Gabriel Sakellaridis dismissed a German newspaper report that Athens was under pressure to impose capital controls on Greeks pulling their money out of local banks, telling Reuters that such a scenario “had no bearing on reality”.

An ECB spokeswoman also denied the Frankfurter Allgemeine Zeitung report, saying there had been no discussion of capital controls at a meeting of the central bank’s Governing Council on Wednesday, which slightly raised the limit on emergency lending to Greek banks.

Greek stocks rose on Thursday’s developments, with the benchmark Athens stock index up 2 percent while banks gained 9 percent.

“We are doing everything to reach a mutually beneficial agreement. Our aim is to conclude this agreement soon,” Sakellaridis told Skai TV earlier on Thursday. “We are trying to find common points.”

GERMAN COMPROMISE?

EU paymaster Germany and fellow euro zone governments have so far insisted no loan deal without the full bailout conditions is on the table. Tsipras promised to ditch austerity measures imposed by the lenders when he was elected last month.

German Finance Minister Wolfgang Schaeuble has poured scorn on suggestions that Athens could negotiate an extension of euro zone funding without making any promises to push on with budget cuts and economic reforms.

But on Wednesday he indicated there may be some possibility of a compromise. “Our room for manoeuvre is limited,” he said during a debate in Berlin, adding, “We must keep in mind that we have a huge responsibility to keep Europe stable.”

Greek Finance Minister Yanis Varoufakis expressed confidence on Wednesday that euro zone finance ministers would approve the Athens government’s proposal on Friday. “The application will be written in such a way so that it will satisfy both the Greek side and the president of the Eurogroup,” he said.

Greece’s finances are in peril. It is burning through its cash reserves and could run out of money by the end of March without fresh funds, a person familiar with the figures said.

Likewise its banks are dependent on the emergency funding controlled by the ECB in order to pay out depositors who have been withdrawing their cash. The ECB agreed on Wednesday to raise a cap on funding available under its Emergency Liquidity Assistance scheme to 68.3 billion euros (US$78 billion), a person familiar with the ECB talks said.

That was a rise of just 3.3 billion euros, less than Greece had requested. The modest increase raises the pressure for a compromise at the Eurogroup. One senior banker said it would be enough to keep Greek banks afloat only for another week if present outflow trends persist.

Euro zone finance ministers rejected Greek proposals to avoid the bailout conditions at a meeting on Monday.

German Chancellor Angela Merkel made clear on Wednesday that Athens would have to give as well as take in negotiations.

“If countries are in trouble, we show solidarity,” she said in a speech to conservative supporters, naming Greece and other euro zone countries that had to take bailouts during the debt crisis. But she added, “Solidarity is not a one-way street. Solidarity and efforts by the countries themselves are two sides of the same coin. And this won’t change.” (Additional reporting by Renee Maltezou and Deepa Babington in Athens, Jan Strupczewski in Brussels, Gernot Heller, Michael Nienaber and Caroline Copley in Berlin, Jason Lange in Washington and Paul Carrel in Frankfurt; Writing by David Stamp and Deepa Babington; Editing by Peter Graff and Paul Taylor)

Politics & GovernmentBudget, Tax & EconomyECB […]

Greece submits request for loan extension from sceptical euro zone

* Athens uses vital EU wording to request extension

* Euro zone officials to discuss whether letter meets terms

* Greek bailout deal due to expire on Feb. 28

* State faces running out of cash by late March – source

* ECB raises emergency funding for Greek banks only modestly (Adds)

By Renee Maltezou and George Georgiopoulos

ATHENS, Feb 19 (Reuters) – Greece formally requested a six-month extension to its euro zone loan agreement on Thursday as it races to avoid running out of cash within weeks and overcome resistance from sceptical partners led by Germany.

With its EU/IMF bailout programme due to expire in little more than a week, the government of leftist Prime Minister Alexis Tsipras urgently needs to secure a financial lifeline to keep the country afloat beyond late March.

Specifically, Athens asked for an extension to its so-called “Master Financial Assistance Facility Agreement” with the euro zone, the official told Reuters. However, Greece is proposing that the terms are different from its current bailout obligations, the official said.

Jeroen Dijsselbloem, chairman of the Eurogroup of finance ministers of the currency area, confirmed the news, tweeting: “Received Greek request for six-month extension.” He gave no further details.

The request boosted hopes for a last minute compromise to avert a Greek bankruptcy and exit from the euro zone however it was not clear if the proposal would be acceptable to euro zone partners who insist Athens comply with all bailout terms.

Senior euro zone officials were due to hold a teleconference later on Thursday to discuss the Greek application. If they are satisfied, then Eurogroup finance ministers will hold a conference call on Friday to conclude an agreement, euro zone sources said.

The wording chosen could help satisfy at least some of the concerns that have held up agreement over the past two weeks, allowing Athens to avoid saying it is extending the current programme that it opposes while creditors can avoid accepting a “loan agreement” without strings attached.

However, crucial details remain to be clarified on fiscal targets, labour market reforms, privatisations and other measures due to be implemented under the existing programme.

Government spokesman Gabriel Sakellaridis dismissed a German newspaper report that Athens was under pressure to impose capital controls, telling Reuters that such a scenario “had no bearing on reality”.

An ECB spokeswoman also denied the Frankfurter Allgemeine Zeitung report, saying there had been no discussion of capital controls at a meeting of the central bank’s governing council on Wednesday, which slightly raised the limit on emergency lending to Greek banks.

Greek stocks rose on Thursday’s developments, with the benchmark Athens stock index up 2 percent while banks gained 4.8 percent.

“We are doing everything to reach a mutually beneficial agreement. Our aim is to conclude this agreement soon,” Sakellaridis told Skai TV earlier on Thursday. “We are trying to find common points.”

GERMAN COMPROMISE?

EU paymaster Germany and fellow euro zone governments have so far insisted no loan deal without the full bailout conditions is on the table. Tsipras promised to ditch austerity measures imposed by the lenders when he was elected last month.

German Finance Minister Wolfgang Schaeuble has poured scorn on suggestions that Athens could negotiate an extension of euro zone funding without making any promises to push on with budget cuts and economic reforms.

But on Wednesday he indicated there may be some possibility of a compromise. “Our room for manoeuvre is limited,” he said during a debate in Berlin, adding, “We must keep in mind that we have a huge responsibility to keep Europe stable.”

Greek Finance Minister Yanis Varoufakis expressed confidence on Wednesday that euro zone finance ministers would approve the Athens government’s proposal on Friday.

“The application will be written in such a way so that it will satisfy both the Greek side and the president of the Eurogroup,” he said.

Greece’s finances are in peril. It is burning through its cash reserves and could run out of money by the end of March without fresh funds, a person familiar with the figures said.

Likewise its banks are dependent on emergency funding controlled by the European Central Bank in order to pay out depositors who have been withdrawing their cash. The ECB agreed on Wednesday to raise a cap on funding available under its Emergency Liquidity Assistance scheme to 68.3 billion euros (US$78 billion), a person familiar with the ECB talks said.

That was a rise of just 3.3 billion euros, less than Greece had requested. The modest increase raises the pressure for a compromise at the Eurogroup. One senior banker said it would be enough to keep Greek banks afloat only for another week if present outflow trends persist.

Finance ministers of the 19-nation currency bloc rejected Greek proposals to avoid the bailout conditions at a meeting on Monday.

German Chancellor Angela Merkel made clear on Wednesday that Greece would have to give as well as take in negotiations.

“If countries are in trouble, we show solidarity,” she said in a speech to conservative supporters, naming Greece and other euro zone countries that had to take bailouts during the debt crisis. But she added, “Solidarity is not a one-way street. Solidarity and efforts by the countries themselves are two sides of the same coin. And this won’t change.” (Additional reporting by Renee Maltezou and Deepa Babington in Athens, Jan Strupczewski in Brussels, Gernot Heller, Michael Nienaber and Caroline Copley in Berlin, Jason Lange in Washington and Paul Carrel in Frankfurt; Writing by David Stamp and Deepa Babington; Editing by Peter Graff and Paul Taylor)

Politics & GovernmentBudget, Tax & Economyloan agreementGreek bailoutEuro zone […]

Money Mart blasted for 50% cash-for-gift-card fee

Keith Leslie, The Canadian Press
Published Thursday, December 4, 2014 3:46PM EST
Last Updated Friday, December 5, 2014 11:13AM EST

TORONTO — Money Mart is defending its practice of exchanging cash for gift cards at half of their face value as a “convenient” service.

The payday loan company hired a New York public relations firm to respond after Ontario’s New Democrats called Money Mart a Grinch for launching the cash-for-gift-cards scheme.

A statement it released from the company says “Money Mart believes it is offering customers a convenient, value-added product though this service.” The payday loan company has branches across the country and says the service is available at select outlets.

Many charities give clients gift cards during the Christmas season, and Ontario NDP Leader Andrea Horwath says Money Mart is “greedily” grabbing half of the money meant for very vulnerable people.

The provincial Progressive Conservatives accused Money Mart of “highway robbery,” and like the NDP, demanded the Liberal government immediately stop the practice.

Consumer Minister David Orazietti says he’ll look at regulating cash-for-gift-card plans, but calls it a tough issue because people trading something they own for less than face value may not be any of the government’s business.

Money Mart said Friday that it would be up to the American public relations firm ICR to respond to questions about it makes money off the gift cards or if it sells them back to the original retailers.

The statement issued by ICR early Friday morning did not directly address Thursday’s accusations from politicians that Money Mart was preying on the most vulnerable members of society.

“Money Mart, like other retailers, is offering a service under which it purchases merchant gift cards from customers who don’t want to purchase the products offered by the gift card merchant,” said the statement.

“The service… includes gift cards from a wide variety of merchants, including hardware and sporting goods stores, fast food and apparel outlets.”

[…]

Site Last Updated 12:46 am, Sunday

BALIK PULAU: Police arrested a man, believed to be a loan shark and seized RM545,599 in cash in a raid on his house in Teluk Kumbar, here, on Thursday.

A police spokesman said the 35- year-old suspect tried to escape in the 2.30pm raid but failed, as a team from the Commercial Crime Investigation Division of the Southwest district police headquarters had cordoned the house.

“Acting on information from the public and intelligence report, a team of policemen, through Op Cenderawasih, raided the house and arrested the man.

“While conducting a search at the house, the police team also found RM545,499 in cash, 51 withdrawal slips from various banks, 96 loan cards from various banks, 51 cheques for almost RM1 million and 10 savings account books from various banks,” he said, here, yesterday.

The spokesman said police also found three machetes which were suspected to be used in illegal money lending activities.

The initial police investigation found the man had been carrying out the illegal activity since last year and had been imposing high charges on the borrowers.

Penang CID deputy chief, ACP P R Gunalan, when contacted, confirmed the man’s arrest and that he was being remanded to assist in the investigation.

He urged those who had borrowed money from the man to come forward to facilitate the investigation. — Bernama

[…]

Payday Loans Are Risky Route to Quick Cash

Published: Thursday, November 20, 2014 at 10:23 p.m.
Last Modified: Thursday, November 20, 2014 at 10:23 p.m.

The holiday shopping season is coming up, and people in search of some quick spending capital might strongly consider taking out a payday loan. Think about it — it’s a quick source of cash without the need for the credit checks. It sounds too good to be true.

That’s because it is.

More than 19 million people struggling with their finances take out one of these unsecured personal loans each year without seeing the danger signs pointing to their finances, like insanely high, triple-digit interest rates.

Before funding your post-Black Friday Christmas shopping with a payday loan, look at some of these simpler — and reasonably safer — ways to get some money fast.

1. Take out a payday alternative loan.

Yes, these actually exist. Veridian Credit Union, for example, offers a payday alternative loan with a maximum loan amount of $1,000 and a six-month repayment term at an interest rate of about 20 percent (usually regardless of a borrower’s credit score). While not the lowest interest rate, it’s more manageable than the high interest and short repayment terms of a payday loan. Another option is to consult with your bank or credit union about a small personal loan with better security, terms and interest.

2. Get a cash advance from your credit card.

Another similar yet less expensive option is to contact your credit card carrier for a modest cash advance. Again, the interest rates might not be the lowest, but this time, you’re borrowing against your own credit limit and not some third-party payday provider. If the cash advance option seems too insurmountable to you, simply use your credit card for your holiday shopping and avoid using it again until you’ve paid down your balance.

3. Withdraw from your emergency fund.

If the added interest of using your credit card is too much to deal with, you can always try taking just enough cash from your emergency fund to cover holiday shopping expenses. Since you act as your own lender here, this loan is entirely up to you to repay — but financial discipline is important. Let too much time go by, and you might never get around to replenishing what you borrowed, and you might not have enough money if a real emergency arises.

4. Ask your employer for an advance.

Your job might permit you a cash advance taken from your next paycheck. It’s not a loan, so you won’t have to deal with interest or repayment because it’s money that you have earned. However, keep in mind that if you ask for $200, be prepared for your next paycheck to reflect that difference. It’s also wise not to make a habit of asking for cash advances. Request some holiday overtime; the extra hours can yield you some extra cash.

5. Sell, pawn or auction off unwanted belongings.

Now’s a better time than ever to sell some of those old things taking up space in your house. It could be anything from a used cellphone to furniture, vintage clothing, appliances and more. Go the online route, like eBay, Amazon Marketplace or Craigslist. Visit local pawn shops or thrift stores and see what they’ll offer for your items.

6. Reduce your spending.

In the spirit of the holidays, is there anything you can temporarily cut back on — or eliminate entirely — to gain some Christmas cash? Put your gym membership on hold for a month or two, cook at home more than eating out, and save on gas by taking public transportation. Aim to spend less disposable income on clothes and entertainment. Some financial experts even suggest adjusting the tax withheld from your paycheck so you’ll have more cash available now versus later.

7. Open a holiday savings account.

This is not a source of “quick” money per se, but if you’re in a cash crunch this holiday, open a savings account designed to save money for holiday shopping. Your bank or credit union of choice might have its own version that can give you higher interest and generous deposit limits. Start now and have plenty of reserve money available by Christmas 2015.

Use these tips as a start and brainstorm some more ways you might be able to save money during the holidays. Asking a friend or family member to lend money can be a good option during a financial crunch or crisis, but it’s not always recommended. Borrowing from parents or siblings and then using that money to purchase gifts for them isn’t very considerate.

[…]

Housing bubble watch? Discounts for all-cash buyers drying up

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AFP/Getty Images

A large chunk of buyers are still paying for homes in all cash — but the price discounts they get for doing that are drying up. And if this trend continues, we may be headed for another housing bubble, one expert reveals.

According to data released Thursday by RealtyTrac, all-cash sales accounted for 33.9% of all sales of single-family homes and condos nationwide in the third quarter of 2014. This is down from 36.9% in the previous quarter and a high of 47% in the first quarter of 2012, though it’s still higher than some pre-recession levels (during the same quarter in 2005, the percentage was 28.9%, for example).

While paying all cash for homes certainly has its advantages — you won’t pay interest on a mortgage, for example, which can save you hundreds of thousands of dollars over the years; and you typically pay a lower price for a home than someone who pays with a loan — the sales price advantage you now get for paying cash is disappearing.

Cash buyers in the third quarter only paid an average of about 10% less than the market value of the home they bought (vs. 4% less on average for all buyers). What’s more, in the same quarter just a year ago, this discount was 14%, and two years ago it was 25%. “The 10% is not a hefty discount given that the average going back to 2001 has been a 19% discount,” explains Daren Blomquist, vice president of RealtyTrac.

This discount is drying up in part because “the margin has been largely squeezed out of this housing market for investors and other cash buyers thanks to the strong rebound in home prices over the past two and a half years,” Blomquist explains.

Guilty holiday shopping secrets

(2:00)

Should we feel bad about cutting corners while holiday shopping?

Perhaps even more troubling, as Blomquist notes, is that this trend “indicates home prices don’t have much headroom to increase going forward.” Indeed, while there’s still an advantage to paying cash, the discount is historically quite low — at least when you look at data since 2001 — and trending downward.

“If we see that discount number go positive and become a premium, it’s a strong indication we may be back in a housing bubble again,” he notes.

[…]

Sears to sell down Canada stake, turns to CEO again for cash

By Sruthi Ramakrishnan and Nathan Layne

(Reuters) – Sears Holdings Corp is turning to its chief executive for cash for the second time in three weeks in a sign that its efforts to sell off assets are coming up short.

The retailer announced Thursday that it would raise up to $380 million by lowering its stake in Sears Canada to 12 percent from 51 percent through a rights offering. It said Chief Executive Eddie Lampert and his hedge fund, which together own 48.5 percent of Sears Holdings, would buy about half of the offering.

The move comes after a year-long attempt to find an outside buyer for the company’s holdings of Sears Canada. The $380 million target is about half of what the company had previously indicated its stake was worth.

The rights offering indicates that Sears may be overestimating the value of its assets, including its vast property holdings, said Brian Sozzi, head of Belus Capital Advisors and a bear on Sears stock. “There just isn’t significant demand for what they are trying to unload on the market,” he said.

The offering also highlights just how dependent Sears has become on Lampert for liquidity. Thursday’s announcement comes on the heels of a $400 million loan last month from Lampert’s hedge fund, ESL Investments. Sears said those funds would be used to get it through the cash-intensive build-up to the year-end shopping season.

The company on Thursday again cited the holiday season in how it would use cash from the rights offering. Chief Financial Officer Rob Schriesheim, in a statement, also said the offering would bring to $1.445 billion the total amount of liquidity raised this year.

Sears has been closing stores, slashing inventory and selling off assets to generate cash after a decade of falling sales and dwindling margins. It has booked losses for nine straight quarters.

Sears said it was aiming to sell 40 million shares of Sears Canada in the offering. It expects to get $168 million after Lampert and his fund exercise their rights in mid-to-late October. Fairholme Capital Management, the No. 2 Sears shareholder, has indicated that some of its clients also plan to subscribe, the company said.

Fairholme, which had decided not to participate in the loan extended last month by Lampert’s hedge fund, did not immediately respond to a request for comment.

The $380 million funding target assumes that other shareholders will subscribe to the offering. Sears Canada, which has been losing market share and has posted losses in nine of the last 14 quarters, said last week that its CEO would resign after just a year at the helm.

Shareholders of Sears Holdings will have the right to buy one share of Sears Canada for each share held, at a price of C$10.60 per share. Sears Canada’s shares were down 1 percent at C$11 in trading on the Toronto Stock Exchange on Thursday.

Sears Holdings rose 6.7 percent to $26.86 on the Nasdaq, reflecting an easing of investor worries over the company’s cash cushion going into holiday shopping season. The stock had lost nearly a quarter of its value after the announcement of the $400 million loan on Sept. 15.

(Additional reporting by Ashutosh Pandey in Bangalore; Editing by Kirti Pandey, Jilian Mincer, Leslie Adler and Cynthia Osterman)

FinanceInvestment & Company InformationSears CanadaEddie LampertSears Holdings […]

Payday loan, phone scam victim issues warning for others | Fox17

VAN BUREN COUNTY, Mich. — Pamela Eldred says she took a phone call on Thursday from a man claiming she owed a debt.

The lifelong Paw Paw resident said this call came from out of the blue, and she wasn’t sure if she owed anything.

The caller identified himself as Daniel Lewis with Philip Hopkins Law Firm in California. He had also left a couple of voice messages.

‘Lewis’ said he represents a payday loan company called CashNetUSA, and he told Eldred she owes $300. If she didn’t pay, she was told, court costs would be in the thousands of dollars, she said.

‘Lewis’ asked Eldred if she had a credit card, and she told him she had her husband’s card.

“He goes, ‘Can you use that? If you don’t you’re going to go to jail. We’re going to call the police,’” Eldred said. She gave the caller her husband’s debit card number.

For Eldred, this could have ended badly. She and her husband could have lost their money.

In this story, she explains the steps she took to avoid disaster, and the Paw Paw police offer advice on how to avoid becoming a victim.

Watch the video for more.

Filed in: News

[…]

Missouri governor vetoes payday loan legislation | FOX2now.com

Image jay-nixon.jpg

JEFFERSON CITY, Mo. (AP) _ Legislation re-writing Missouri’s payday loan laws has been vetoed by Gov. Jay Nixon because he says it falls short of “true reform.”

Borrowers in Missouri currentl can renew a payday loan up to six times and can face interest rates as high as 75 percent of the loan’s original amount.

The bill vetoed Thursday would have ended loan renewals and capped fees and interest rates at 35 percent.

Supporters said the bill would provide greater protections to consumers.

But Nixon said it still would have allowed unreasonable interest rates and that people still could have been offered multiple loans by multiple lenders at the same time. He said the bill “appears to be part of a coordinated effort by the payday loan industry to avoid more meaningful reform.”

___

Payday loan bill is SB694.

Online:

Legislature: http://www.moga.mo.gov

Filed in: News

[…]

American Apparel lender demands $10M loan payment after CEO’s exit

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American Apparel is suddenly facing a cash crunch.

A key lender to the embattled clothing company on Thursday demanded repayment of a $10 million loan, threatening a liquidity crisis for the retailer on the heels of its ouster of CEO Dov Charney, The Post has learned.

Lion Capital, a UK-based investment firm that has been friendly to Charney, denied a waiver on the default triggered by the executive’s dismissal, forcing American Apparel to raise funds to pay it off — either by issuing new debt or additional equity in the company, sources said.

American Apparel’s debt structure has cross-default provisions that also will trigger a default on the company’s $30 million credit line with Capital One, potentially creating a cascading effect that could force a bankruptcy if it can’t line up funds.

“They’re either going to have to add debt at punishing rates, or raise more equity and further dilute shareholders or go bankrupt,” according to a source briefed on the situation.

The Los Angeles sportswear manufacturer and retailer could also be a takeover target — its shares have soared nearly 41 percent in the last two trading days, closing Thursday at 74.4 cents a share.

American Apparel couldn’t immediately be reached for comment Thursday. Lion officials declined to comment.

Lion has given American Apparel until July 4 to repay the loan, sources said.

Other lenders, including Cerberus Capital Management, have expressed interest in refinancing the debt, several sources noted.

An American Apparel store on the Lower East Side of ManhattanPhoto: Stefan Jeremiah

This week, American Apparel confirmed it has hired investment bank Peter J. Solomon to raise money in case Lion decided to call in its loan.

Co-Chairman Allan Mayer, who led last week’s coup against Charney following the company’s annual meeting, said late Thursday that the company is still in talks with Lion about the status of the loan, declining to comment further.

Insiders said Lion CEO Lyndon Lea became frustrated in recent days after American Apparel’s board appeared to stonewall him in response to questions about the internal investigation that spurred Charney’s dismissal.

In a June 18 termination letter to Charney, the board cited “willful misconduct,” including allegations that he allowed an employee to create a blog with naked pictures of Irene Morales, a former employee who had filed a sex harassment suit accusing Charney of making her his “sex slave.”

In addition to denying American Apparel a waiver on its debt, a source said Lion has been advised by its lawyers to temporarily forgo its right to take two board seats because of provisions triggered by Charney’s ouster.

The concern, according to the source, is legal liability for board members engaged in an arbitration dispute with Charney, who is alleging he is entitled to as much as $25 million in severance.

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[…]