Los Angeles–Ousted American Apparel CEO Dov Charney has upped his stake in the company to 42.98% as his battle with the company intensifies.
A filing today revealed Charney acquired 27.4 million shares on June 27 for $19.5 million, loaned to him by Standard General. He had previously held a 27.2% stake in the company.
Headed to Court?
American Apparel had adopted a poison pill to prevent Charney from increasing his holdings and moving to take control of the company. But it is unclear whether the purchase will trigger the pill, which would dilute Mr. Charney’s holdings, a person familiar with the situation told The Wall Street Journal.
“The issue comes down to timing,” the person said, noting that Charney is buying the stock from investment firm Standard General, which notified him it had acquired the stock on June 27. That’s the same day that a committee of American Apparel’s board declared the pill. If the stock purchase came before the pill was in effect, it wouldn’t be triggered, the person said.
According to Bloomberg, American Apparel turned down Monday his request to hold a meeting of investors. Charney has pledged to fight attempts to terminate his employment and says some shareholders want him to continue to lead the company.
American Apparel last week hired advisory firm Peter J. Solomon Company to ensure it has “adequate access to capital in the future at a reasonable cost.”
Charney also disclosed in the new filing he had sent a letter to the board calling for a special meeting of stockholders for Sept. 25. He apparently is looking to amend the company’s bylaws to boost the number of directors to 15, among other things.
Now that Charney essentially owns a 43% stake and is trying to get a majority vote, according to the New York Post, it would seem as if he is trying to take over the company.
The back and forth that’s going on at American Apparel essentially means one thing now –the board and Charney are likely heading to court, Wall Street analysts speculated.