New York (HedgeCo.Net) – Former American Apparel founder and CEO has handed his entire stake over to New York hedge fund Standard General LP. The deal, including a loan, boosted his share from 27% to 43%, and enabled the hedge fund to negotiate directly with the current independent directors.
However, the NYT reports: “In striking a deal that gave him a 43 percent stake in American Apparel, Mr. Charney effectively ceded any authority that is not inextricably linked to Standard General’s approval. In essence, he is not permitted to make any move unless Standard General consents, according to the terms of the agreement.”
“I handed over my ownership control to Standard General so they could protect the company and all of its stakeholders, particularly the employees,” Charney said. “The least important thing was me. I know that will be dealt with fairly later.”
At American Apparel, which he started at age 20, Charney pioneered the Made in USA sweatshop-free model of fair wages and a refusal to outsource manufacturing. He has been involved in several controversial lawsuits, including a $10M lawsuit from film director Woody Allen and several sexual harassment lawsuits involving ex-employees. The issues resulting from some of these led to his dismissal as the company’s CEO.
Standard General was founded in 2007 and has been a SEC-registered Investment Adviser since 2009.
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