After throwing out founder and CEO Dov Charney for ongoing scandals and incompetence, which began with sexual harassment allegations, American Apparel is planning to reward shareholders, as reported by Reuters. The company is adopting a one-year stockholders rights plan that has a 10% trigger.
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The board decided on the plan to make sure those who hold shares of American Apparel are treated with fairness. Every right will allow the shareholder to buy a number of shares for $3.25 each of stock or securities that have a substantially higher market value. There has been talk of a potential takeover, and American Apparel has apparently been approached by Irving Place Capital.
Feeling his position in the company he started was fading away, Dov Charney raised his stake in the company to 43%, but this was through a loan from Standard General, and the hedge fund fully controls the stake.