Ousted American Apparel CEO Dov Charney boosts his stake to 43 percent one day before American Apparel adopts an anti-takeover plan. Fred Katayama reports.
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Bust your buttons, looks like war is breaking out over American Apparel. Ousted CEO and founder Dov Charney is firing back, boosting his ownership stake in the hip apparel maker to 43 percent from 27 percent. He says he reached that deal on Friday.
He made that move one day before American Apparel adopted the so-called poison pill aimed at making a hostile takeover difficult. The pill would be activated if Charney were to acquire more shares. Triggering that defense would allow shareholders to buy newly issued shares, diluting the stake that Charney has amassed.
Sparking the fight: the company's termination of Charney last month for allegedly misusing corporate funds and disseminating nude photos of a former employee.
This comes as the company known for its sexy ads and sweatshop free manufacturing struggles with weak sales, big debt, and a stock that has fallen 27 percent this year. . Add one more to its list of woes: The New York Times reports that its longtime lender, Lion Capital, has requested repayment of a $10 million loan. That loan has a provision saying that if Charney were no longer CEO, American Apparel would be in default.
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