Boston, MA 07/01/2014 (wallstreetpr) – American Apparel Inc (NYSEMKT:APP) has moved to deny ousted CEO Dov Charney an opportunity to take control of the company. The development comes at a time when Charney showed interest in taking over the control of the company through acquisition of more shares and supporting the increase of board membership.
Charney was ousted from the company following an investigation that revealed his misconducts that range from misuse of funds, sexual harassment, retaliation and more. His fate will be sealed after 30 days following his suspension according to the terms in his contract.
Since his ouster, Charney has been fighting back with the aim of regaining the control of the company that he founded. However, the board has continued to place roadblocks on his path because they believe that the company is better off without him especially in terms of reputation.
Charney owns 27 percent stake in American Apparel Inc (NYSEMKT:APP) and he recently entered a deal with Standard General, a New York-based investment bank, to acquire more shares of the company to give him an opportunity to infiltrate the board.
However, following the change of the company bylaws in a move that reflects a “Poison Pill,” Charney cannot acquire enough shares to gain control of the company. He has also been denied the opportunity to call a special shareholder meeting.
Although American Apparel Inc (NYSEMKT:APP) has made it difficult for its stockholders including ousted CEO Charney from taking control of the company through purchase of more shares, the shareholder right plan does not impact the takeover of the entire company. As such, the company is open for takeover bids that are attractive to shareholders.
American Apparel Inc (NYSEMKT:APP) has made a number of references to the possibility of a deal to sell the company, and analysts believe that the company can be taken over by a retailer or an investment firm. However, the interim CEO John Luttrell has denied that the company is interested in the sale. Nonetheless, the company’s weak financial position is a strong point to justify a sale.