(Adds comments from co-chairman)
By Shailaja Sharma
June 23 American Apparel Inc's
co-chairman said on Monday the company was not for sale, had no
need for immediate capital, and that the search for a new chief
executive to replace ousted Dov Charney had generated "enormous
The board of the hipster retail chain terminated Charney,
the company's founder, as chairman and CEO last week, citing
alleged misuse of corporate funds and his role in disseminating
nude photos of an ex-employee who had sued him.
"We are certainly not looking to sell the company," Allan
Mayer, the company's new co-chairman, told Reuters.
"If someone came and said they want to buy American Apparel
for $10 per share, we'd be crazy to not listen ... but by no
means (are we) looking to sell now," he said.
American Apparel's shares were trading at 67 cents on Monday
afternoon, down 2.7 percent.
The stock rose as much as 5.4 percent in early trading after
Charney said he wanted to talk to the company about shaking up
its board and management.
Charney, the largest shareholder in the company with a 27.2
percent stake, said in a regulatory filing that he had been
approached by "certain persons" who had expressed support for
his continued leadership. (1.usa.gov/1iyOA2G)
Charney, who has a long history of allegations of misconduct
and bizarre behavior - including appearing at a meeting in his
underwear - said his supporters included stockholders.
"No idea who these supporters are," Mayer said.
FiveT Capital, which holds about 13 percent in American
Apparel and is the largest shareholder after Charney, has
indicated it does not support him, he said.
Mayer noted that American Apparel had hired investment
banking advisory firm Peter J. Solomon Co to ensure adequate
access to capital.
The company said last week that Charney's ouster could
result in the 250-store chain breaching debt covenants.
"At this moment don't have need for additional capital,"
Mayer said. "But it is nice to have something in reserve if
something unexpected happens."
American Apparel, which has reported losses in 16 of the
past 17 quarters, had long-term debt of about $215 million as of
Mayer said the board expected to decide on a new CEO in the
"We have been already given to understand that there are a
number of really top people who would be interested in the job,"
he said. "It's going to be challenging job for the new CEO but
good people are attracted to the most challenging jobs and this
brand has so much power in it that it is a very attractive
position. There is an enormous interest in this job."
John Luttrell, the company's chief financial officer, is
acting as interim CEO.
Mayer said the board felt it was not worthwhile to engage in
discussions with Charney "at this time."
"We had a long discussion last week at the board meeting and
heard Dov out for quite a long time," he said.
"And we are satisfied that we understand his position and we
are satisfied that we heard nothing that would cause us to
rethink our decision."
Charney's lawyer has already sent a letter to American
Apparel threatening legal action should 45-year-old Charney not
regain his executive positions.
Montreal-born Charney said on Monday that he wanted to
engage in discussions with the management and the board on
matters related to board composition, management, operations,
business, financial condition and strategic plans.
Shares of the company, known for its often racy billboard
ads that feature scantily clad young women, have fallen 65
percent in the last 12 months.
(Reporting by Shailaja Sharma in Bangalore; Editing by Sriraj
Kalluvila and Ted Kerr)