Dov Charney has amassed 43 percent of American Apparel’s stock with the help of a hedge fund, putting the ousted CEO within striking distance of majority control of the retailer’s shares.
Looking to reverse a surprise coup that stripped Charney of his chairman role and suspended him as CEO, Charney has partnered with New York investment firm Standard General LP in search of a majority stake, according to filings with the Securities and Exchange Commission.
Charney has borrowed more than $19.5 million from Standard General to assemble the 43-percent stake, according to an amended 13-D securities filing early Tuesday.
As first reported by The Post last week, Charney is looking to force a shake-up of the board by enlarging his 27-percent stake in the company to a controlling stake. Charney’s holdings were diluted from more than 40 percent this spring because of an offering of new stock to raise cash for a debt payment.
In a June 18 meeting, the board cited alleged misconduct that includes allowing a blogger to post naked pictures allegedly sent to him by a former employee in order to debunk the former employee’s sex-harassment claims.
Charney still appeared short of a majority stake as of Monday, with about 74.6 million, or 43 percent, of the company’s 173 million issued shares.
Nevertheless, insiders said he may have the support of additional sympathetic shareholders to get him the needed 7-plus percentage points in shares.
On Friday, Charney requested a special shareholder meeting in a bid to more than double the size of American Apparel’s board to 15 members — a request that the company’s seven-member board denied on Saturday.
Charney disclosed Friday he has partnered with Standard General to assemble the majority, shortly after the company’s stock surged 30 percent from a day earlier on heavy trading volume.
Sharp price run-ups on Thursday and Friday raised speculation that Standard General had been buying aggressively — and a filing late Monday confirmed it.
Standard General revealed in the filing that it had bought up 27.4 million shares last Thursday and Friday at a price of 71¹/₂ cents a share, plus another 1.54 million shares on Monday at 91 cents.
American Apparel shares on Tuesday lost 3.3 percent to close at 87 cents.
In response to Charney’s Friday filing revealing his partnership with Standard General, American Apparel on Saturday adopted an anti-takeover “poison pill.”
American Apparel also disclosed that Charney had proposed a special shareholder meeting to enlarge the board with friendly directors, and said it had changed its bylaws to thwart such an attempt with restrictions including the lengthening of notice requirements.
Meanwhile, as first reported by The Post, American Apparel is also getting squeezed by lender Lion Capital, which has denied a waiver on a $10 million loan that contains a provision that was thrown into default by Charney’s ouster.
Lion has given American Apparel until Friday to repay the loan. The company has said it has the funds to make the payment.