Sunday, 23 April 2017
Last updated 1 day ago
Jul 24 2014 | 7:39am ET
Struggling retailer American Apparel has named most of its new board of directors under a $25 million rescue agreement with hedge fund Standard General.
Under that agreement, Standard General has the right to pick three of the seven members of the board. It named partner David Glazek and turnaround specialist Thomas Sullivan to the panel, and is expected to name its third director shortly.
Sullivan sits on the board of Media General with Standard General chief investment officer Soo Kim.
The hedge fund and American Apparel agreed on two other board members: RadioShack CEO Joseph Magnacca and former Fisher Communications CEO Colleen Brown. American Apparel’s co-chairmen, David Danziger and Allan Mayer, remain on the board.
“This slate of directors brings significant financial, retail and corporate turnaround expertise to the board,” Glazek said.
Brown’s appointment is something of a milestone for American Apparel as its first female board member in its 25 year history. Her addition comes after company founder Dov Charney was fired for alleged sexual harassment.
Charney’s fate is still up in the air: He is working with Standard General and signed over voting rights to his huge stake in the company to the hedge fund. But Standard General hasn’t promised him a role at the company, pending the results of an internal investigation into his behavior. That probe is expected to be wrapped up next month; he remains a paid consultant until then.
The new board will take their seats on Aug. 2.
In addition to the turmoil surrounding Charney, the new board leads a company that has been losing money for years. American Apparel required Standard General’s bailout after firing its founder, which led private-equity firm Lion Capital—a Charney ally—to call in a $10 million loan, default on which could have jeopardized a larger line of credit from Capital One.