Dov Charney isn't going down without a fight. In an unexpected twist, the ousted founder and CEO of American Apparel is now buying up shares in order to wrestle back control of the company he founded in 1998.
In June, the board of directors voted unanimously to relieve Charney of his roles as president, chief executive officer and chairman due to an ongoing investigation into his alleged misconduct. The 45-year-old vowed to return, indicating that he would seek severance pay in the region of $23 to $25 million if he was not reinstated – only to be told that the board refused to meet with him.
Now Charney is fighting back by buying 27 million shares of American Apparel, which increases his previous stake in the company from 27 per cent to 43 per cent. An investment firm called Standard General entered into a loan agreement with Charney by buying the shares and lending Charney the money necessary to subsequently buy the shares from them. If Charney gains a majority stake in the company, he'll be able to effectively engineer his own return to power.
But the board of American Apparel won't surrender that easily: it's responded to Charney's attempt at a takeover by enacting a shareholder rights plan that prevents investors or groups from buying a big stake in the company and stops those who already have a large stake (like Charney) from increasing their shares.
High-level corporate maneuvering, a businessman anti-hero, stock market wheeling and dealing – has somebody called Martin Scorsese yet? The convoluted saga of American Apparel might just be the 21st century sequel to Wolf of Wall Street.
Follow Zing Tsjeng on Twitter here @misszing
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