The stock price of American Apparel Inc. jumped 12 percent Monday morning after the struggling Los Angeles apparel company disclosed in a regulatory filing that Chief Executive Dov Charney had increased his stake in the company to 54 percent.
Charney on Thursday paid about $2 million to buy 1.8 million shares at $1.11 per share, according to the Securities and Exchange Commission filing. The price was an 18 percent premium to its closing price the day before. He also canceled three promissory notes, which had an aggregate value of about $4.7 million, in exchange for more than 4.2 million shares.
Charney formerly had about a 51 percent stake in the company he founded in 1998. He last made a major share purchase in December when he acquired $1.67 million worth of shares over several days at an average price of $1.48 per share.
The latest purchase comes as Charney continues to work with one of the company’s largest creditors to improve the company’s finances. In February the company had said that some lenders had extended a credit agreement, but a default could still jeopardize its ability to continue as a “going concern.”
American Apparel also has faced negative publicity from two new sexual harassment lawsuits filed against Charney and the company in New York state. A judge indicated last week that she may dismiss one of the cases and instead allow it to be heard in arbitration.
Shares were up 11 cents, or 12 percent, to $1.02 in midday trading on the New York Alternet.
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