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Sunday, Sep 24, 2023

American Apparel: Takeover Bid, Board Shakeup and ‘Betrayal’

American Apparel Inc. on Monday confirmed reports that a buyer has expressed interest in acquiring the company for as much as $1.40 a share.

“The Board takes these matters seriously, and it will evaluate this proposal in the ordinary course of business,” the company said in a statement. Rumors of a buyout bid had surfaced last week, sending the company’s stock soaring.

The embattled downtown L.A. clothing company also announced a board shakeup on Monday. Co-Chairmen Allan Mayer and David Danziger have stepped down and will be replaced by Colleen Brown, who joined the board in August, the company said in a statement. Mayer and Danziger will remain directors and keep their committee posts.

The news comes a week after the company ousted founder and former chief executive Dov Charney as chairman, citing allegations of misconduct, including violations of sexual harassment policy and misuse of corporate funds. Charney had already been suspended as chief executive in June. After firing Charney, the company announced that retail veteran Paula Schneider would become its first female chief executive.

American Apparel has not named the source of the takeover proposal, but sources told Bloomberg it was backed by New York private equity firm Irving Place Capital and that the proposal would involve Charney returning to American Apparel in some capacity.

Charney is still American Apparel’s largest shareholder, with a 43 percent stake in the company, but that doesn’t translate to power. He handed over his voting rights to New York hedge fund Standard General as collateral for a loan in July that helped him boost his ownership in the company after his initial suspension from the company.

Charney told Trish Regan at Bloomberg TV that he felt betrayed by the hedge fund, which he said promised to reinstate him in a leadership role and instead supported his ouster.

“They robbed me,” Charney told Trish Regan at Bloomberg TV in an off-camera interview.

A Standard General spokesman said that the fund’s objective has been to help American Apparel grow and succeed.

“We supported the independent, third-party and very thorough investigation into the allegations against Mr. Charney, and respect the Board of Director’s decision to terminate him based on the results of that investigation,” the spokesman said. “We believe that American Apparel will benefit from the leadership of its new CEO, Paula Schneider, and we are focused on supporting her and American Apparel going forward.”

Shares of American Apparel rose 7 cents, or about 7 percent, on Monday to close at $1.14.

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