American Apparel Inc. shares jumped 16 percent Friday after the apparel manufacturer and retailer said it was able to amend an important credit agreement with its key lender.

The Los Angeles company said the amended agreement with Lion Capital eliminates a requirement that it meet minimum operating income this year as measured by consolidated earnings before interest, taxes, depreciation and amortization.

Under the amended agreement, however, American Apparel agreed to allow its operating income to be “tested monthly” next year.

In addition, Lion Capital said it will work with Chief Executive Dov Charney to hire several new senior executives to help manage the trendy apparel company, which has struggled through sales slumps and an immigration raid that forced the company to lay off many of its production workers.

“We are working together with Dov to realign the capital structure of American Apparel,” said Lyndon Lea, Lion’s founder and partner, in a statement. “We are particularly impressed by Dov’s passion and energy, and have complete confidence in the American Apparel brand and its business model as an integrated manufacturer and retailer.”

Earlier this year, American Apparel said that in addition to possibly not satisfying the debt covenant, it might not have enough liquidity to sustain itself. The company, which operates 279 retail stores, released a “going concern” warning for the potential of a bankruptcy filing.

Shares closed up 20 cents, or 16 percent, to $1.43 on the New York Alternet.