American Apparel (NYSE:APP) is positioned to adopt a so-called poison pill – a one-year stockholder rights plan – as its latest move to fight back against recently ousted Dov Charney.
Recently suspended Charney – former president and CEO, and the company's founder – was fired over allegations of misconduct. However, he still owns a 27 percent stake in American Apparel and is the largest shareholder. In response, Charney has borrowed $20 million to boost his stake in the company, giving him even more clout then he already has, reported WWD.com. In fact, he's also taken it upon himself to call for a special shareholders meeting in September to increase the size of the board and to implement other changes.
The poison pill was set into motion in response to Charney's interest in a regulatory filing to acquire control or influence over the company, reported MarketWatch.
Charney has said that the board terminated him without merit and has vowed to contest it. In the interim, CFO John Luttrell is serving as CEO and Allan Mayer and David Danziger are co-chairmen to replace Charney.
In addition, the retailer now has to deal with repaying a $10 million loan to its lender Lion Capital, which could trigger a default on other borrowings.
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