NEW YORK (TheStreet) -Ousted American Apparel (APP) CEO Dov Charney disclosed Tuesday that he now owns a 43% stake, which could mean the next step for the company is the courthouse, according to an expert.
Shares were sinking 5.3% to 85 cents on Tuesday as the boardroom saga at the T-shirt and basics retailer took another right turn.
According to a new Securities and Exchange Commission filing, Charney owns 74.5 million shares, or 43% of American Apparel's outstanding stock, as of June 27. Charney, who previously owned approximately 27%, was able to amass a more significant stake through a partnership with Standard General, a New York-based hedge fund.
Charney disclosed in an SEC filing last week that he had entered into a partnership with Standard General in which the firm would acquire at least 10% of shares of American Apparel. Standard General would loan Charney the money to buy the shares from the firm. The loan terms include: an interest rate at "10% per annum;" a maturity date of July 15, 2019; and that Charney and Standard General "will agree to vote their shares only as agreed between them," the filing said.
American Apparel retaliated on Saturday, adopting a one-year shareholder rights plan, or so-called poison pill, that is triggered if any one shareholder attempts to purchase more than 15% of the company's shares. Additionally, if any shareholder that already owns more than 15% of the stock, i.e. Charney, acquires an additional 1% of stock, the pill is triggered as well. Poison pills dilute voting rights and are a backstop against hostile takeovers.