One of American Apparel’s leading creditors may be attempting to engineer a sale of the company, according to a report in the New York Post.
In an article citing information from unnamed sources, the Post reported Wednesday that Monarch Alternative Capital, American Apparel’s biggest bondholder, wants to sell the company and close its Los Angeles factory.
Monarch spokesman Jeremy Fielding said he could not respond in detail to the Post’s story, but said the company disputes its accuracy. He was able to say that Monarch is not attempting to shift American Apparal’s manufacturing overseas.
“We’re a bondholder and we support the Made in America strategy,” he said.
American Apparel could not be reached immediately for comment.
Charney said by telephone that he had no comment.
American Apparel suspended Charney in mid-June following an investigation into alleged misconduct. The company declared its intention to fire Charney after a month had passed and named John Luttrell as interim chief. The New York Post’s sources told that paper that Monarch has attempted to convince Luttrell to pursue a licensing deal with Hong Kong firm China Dongxiang.
Charney has attained control of 43 percent of American Apparel’s stock since the dispute began. His purchase was aided by a loan from Standard General of New York, according to SEC filings.
Building that 43 percent stake into a majority stake could be very difficult. As reported by Businessweek, Charney would trigger a “poison pill” that American Apparel’s board created to dilute the stock if he acquires 1 percent or more of outstanding shares. That means Charney would have to make alliances with shareholders to in order regain control of the firm.
Shares of American Apparel fell by a fraction of a cent to close at $0.83 cents Wednesday on the Nasdaq.