US: Standard General holds talks with American Apparel
Standard General has a 43% stake in American Apparel
American Apparel's largest investor, Standard General, says it is in talks with the company over its finances, the composition of the board and strategy.
In a filing to the Securities and Exchange Commission, the hedge fund said it would consider launching a proxy fight in order to win seats on the board.
"Our plan is to bring before the issuer's stockholders a highly qualified slate of independent directors that will bring the requisite expertise in retail turnaround as well as institutional credibility," it said in the filing.
Standard General has a 43% stake in the company after it was last week handed over by ousted chief executive Dov Charney in a change of strategy to win back his position.
The hedge fund, however, insists it is not endorsing Charney: "He is the largest shareholder, and the voting agreement allows us to control his block of shares, and the loan mechanism provides us with the additional protection of a collateral interest in all of his shares. He can no longer vote his shares without our consent."
Standard General had earlier loaned its American Apparel shares to Charney in order to allow the former CEO to build up his stake from 27.2% to 42.98%.
In response, however, the American Apparel board adopted a so-called 'poison pill' stockholder rights plan aimed at preventing Charney from regaining control.
The company has so far refused to meet with Charney since his suspension, and is now understood to be under pressure to repay a $10m loan from another investment firm, Lion Capital.
According to Reuters, the firm has ordered immediate repayment of the loan, after the retailer failed to do so by a 4 July deadline.
Under the terms of the loan agreement, the ousting of Charney triggered an event of default.
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