American Apparel CEO Dov Charney increases stake in company [Updated]
American Apparel Chief Executive Dov Charney, currently embroiled in two sexual harassment lawsuits filed by former employees this month, has increased his stake in the Los Angeles clothing company.
The news sent the company's stock surging 9% to 99 cents on Monday.
Charney bought 1.8 million shares at a price of $1.11 a share on March 24 for cash, increasing his stake to 54% from 51.8%, according to a regulatory filing. American Apparel's stock closed at 93 cents that day.
[Updated at 2:30 p.m.] In addition, Charney canceled three promissory notes issued to him by two subsidiaries of the company, which as of March 24 were valued at about $4.7 million, in exchange for 4,223,194 shares of common stock.
Half of the note shares were issued to Charney immediately; the other half will be given to him within three years of the closing date of the deal if the company's common stock on the New York Stock Exchange exceeds $3.50 for 30 consecutive trading days or if there is a change of control of the corporation, the filing said.
Last month, the company, which has been struggling with sales declines and losses, reported that it had received a waiver to its credit agreement with Lion Capital and other lenders to help it avoid defaulting on its loan. Still, the company warned that it had concerns about its long-term viability.
-- Andrea Chang