NEW YORK American Apparel Inc has adopted a one-year shareholder rights plan to help its board of directors better protect its stockholders and ensure they are treated fairly, the company said on Saturday.
The company said its action came in response to reports of rapid accumulation of American Apparel's outstanding common stock, and in the context of a Securities Exchange Commission filing in which its ousted founder and chief executive, Dov Charney, expressed an intent to increase control or influence over the company.
The move, made by a special committee of the company's board of directors, is intended to limit the ability of any group or person, including Charney, "to seize control of the company without appropriately compensating all American Apparel stockholders."
The plan, allowing a person or group to acquire up to 15 percent of common stock, is similar to other arrangements adopted by publicly held companies and is not aimed to prevent or deter takeover bids that offer fair treatment, the company said.
Initially, "the rights will be attached to all shares of common stock" and "each right entitles the holder to purchase one ten-thousandth of a share of preferred stock at an exercise price of $2.75," the company said in a statement.
American Apparel's board ousted the 45-year-old Charney as chairman earlier this month, citing unspecified allegations of misconduct. It suspended him as president and chief executive officer, and plans to fire him for cause, following a 30-day period stipulated in his contract.
(Reporting by Gunna Dickson; Editing by Bernard Orr)