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Sexy Ads, Debt Talks Hit American Apparel

Risqué advertising and a crushing debt load have been ongoing problems for downtown Los Angeles clothing maker American Apparel Inc., and there was news on both fronts Wednesday.

The company told the Securities and Exchange Commission on Tuesday that it would not be filing its latest annual report by the deadline because it was in talks with its creditors about changes to its credit agreements, and that taking time away from discussions would affect its financial statements. Its annual report is due at the end of this month.

In an SEC filing, American Apparel said the talks would allow the company to execute a $15 million credit agreement, and that the company plans to use money from that deal to make payments to other creditors.

Though it will delay filing its annual report, the company on Wednesday reported estimated earnings to the SEC.

The company reported sales of $609 million last year, down 4 percent from the previous year, though the company’s net loss narrowed. American Apparel lost $69 million (43 cents a share) last year, down from $106 million (96 cents) the year before.

American Apparel fell 5 percent Wednesday, closing at $0.73.

In the ad department, an advertising regulator in the United Kingdom said Wednesday that an advertisement on American Apparel’s website endangers children. It’s the latest ad ban in the U.K., where American Apparel images have been blocked twice before.

London’s Advertising Standards Authority, which regulates advertising, says an American Apparel ad of a girl in a thong bodysuit with bare buttocks appeared to sexualize a child because the girl appeared to be younger than 16 years old. The authority, which blocked American Apparel ads in 2009 and 2012, told the company to remove the ad from its website and to not post similar images in the future.

American Apparel responded, saying that the model was 20 years old and that the image was typical of other American Apparel ads.

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