After three weeks of battling it out, American Apparel has finally reached an agreement with Standard General, the retailer's largest shareholder. Terms include creating a new board and keeping the manufacturing of its clothing in the United States.
No documents have been officially signed but mutual terms have been reached between the retailer, investor, and even ousted American Apparel founder, Dov Charney, reported the New York Times.
The deal will include $25 million from Standard General to help the retailer's financial position—$10 million of which will go to pay off a loan to Lion Capital. Lion Capital ordered American Apparel to repay the loan immediately after the retailer missed the July 4 deadline.
Charney recently joined forces with Standard General to buy a majority stake in the company. The deal gave him 43 percent of the business but also required Charney to relinquish his voting rights unless he got approval from Standard General.
Early this month, American Apparel adopted a "poison pill" one-year shareholder rights plan, in a move to counterattack Charney, who had been fired for misconduct and was attempting to borrow money to boost his already large stake in the company.
As of March, American Apparel had not reported a profit in 16 of the past 17 quarters and had more than $214 million in long-term debt, reported Reuters.
-See this New York Times article
-See this Reuters article
American Apparel CEO likely fired over sexual harassment
American Apparel firing CEO over misconduct
Kmart, Sears, American Apparel voted least engaging brands
American Apparel seeks restructuring advice as it struggles with massive debt
American Apparel CEO: We pay workers $2,000 per month, and H&M can't pay $50?