American Apparel expects fight from ousted founder
By Lisa Baertlein and Ronald Grover
LOS ANGELES (Reuters) - The board of hipster clothing brand American Apparel Inc APP.A has ousted founder Dov Charney as chairman and said it was preparing for the controversial executive to fight his removal.
American Apparel replaced the 45-year-old Charney as chairman late Wednesday, citing unspecified allegations of misconduct. It also said it suspended him as president and chief executive officer, and plans to fire him for cause, following a 30-day period stipulated in his contract.
"This is his baby, and he owns 27 percent, so we don't expect him to just walk away," said Allan Mayer, American Apparel's interim co-chairman, in an interview.
Charney "has always said he would never do anything to harm this company, but his view of what's good or bad for this company is very different from ours," Mayer added.
The usually outspoken Charney, who has been the target of sexual harassment lawsuits, told Reuters on Thursday he was not yet ready to speak publicly.
Charney's ouster, which followed the company's annual meeting, came after a four-month investigation by the board's five independent directors into a series of actions it considered detrimental to the company, according to a person with knowledge of the investigation.
The company is also expected to announce it has retained an investment banking firm to provide capital if its lenders declare the company in default on some of its debt, a source said. The company said it may be in default as a result of Charney's departure.
Shares in the Los Angeles-based retailer, known for its often racy billboard ads that feature scantily clad young women, rose as much as 22 percent on Thursday. The stock later eased, adding 7.1 percent to 69 cents in afternoon trading. Continued...