Dov Charney, the recently deposed CEO of Top 40 supplier American Apparel (asi/35297), says he has increased his stock in the company he founded to nearly 50% of the organization’s total shares. Charney had owned 27.2% of the company’s shares when he was removed from his role as CEO two weeks ago, and he acquired an additional 15.78% of the company’s shares on Friday.
That transaction, which brings Charney’s total shares of American Apparel to 42.98%, was secured for Charney through a loan agreement with hedge fund investor Standard General. Under the agreement, Standard General would buy American Apparel stock and then would lend Charney the money to buy the stock from the investment firm at an annual interest rate of 10%. Late Monday, Standard General reported to the SEC that on Thursday and Friday it purchased 27.4 million shares, which it sold to Charney. On Monday, it bought an additional 1.5 million shares, or less than 1% of the company's shares.
Following the company's annual meeting on June 18, the American Apparel board voted unanimously to replace Charney as chairman immediately and "notified him of its intent to terminate his employment as president and CEO for cause.”
Now, as Charney is fighting to regain control of his company, American Apparel’s board this past weekend adopted a so-called poison-pill strategy for one year. The tactic was put in place by a special committee of the board, which said it would limit the ability of any shareholder "to seize control of the company without appropriately compensating all American Apparel stockholders."
"They now have an out-and-out war going on with their former CEO and by far largest shareholder," said Lloyd Greif, chief executive of investment banking firm Greif & Co., to the Los Angeles Times. "If he is at 43%, he is within spitting distance of actual control."
Charney has been a member of the Counselor Power 50 since the list's inception in 2006. American Apparel ranks as the 14th-largest supplier in the industry, and reported its promotional market revenues for last year as $99.2 million.