About 20 shareholders attended the annual meeting of embattled American Apparel Inc. in Los Angeles Tuesday, but Dov Charney, the company’s chairman, chief executive officer and principal shareholder, wasn’t among them.
This story first appeared in the June 22, 2011 issue of WWD. Subscribe Today.
In response to a WWD query, Charney sent a text message saying he was in Japan on company business. Glenn Weinman, senior vice president and general counsel, presided at the brief meeting, which was closed to the press.
Although Charney’s absence was unusual, his presence was by no means required. Charney holds or controls 54.3 percent of the shares outstanding, and, in the company’s definitive proxy, had indicated his intention to vote in the affirmative on all company proposals, including provisions that would increase the number of shares, prevent his stake from being diluted and reduce the exercise price of Lion Capital warrants. These details had been hammered out in previous rounds of refinancing but required shareholder approval.
Whether he did so in person or through a proxy was a technicality, for purposes of corporate governance. Still official results of the votes weren’t available immediately after the meeting.
Following an earlier rescue by Lion, a group of investors led by Canadian financier Michael Serruya bailed out American Apparel in April by buying 15.8 million shares at 90 cents each, giving the company $14.2 million to shore up its finances and the investors a 27 percent discount on the company’s stock at the time.
The investors also received warrants for the right to purchase an additional 27.4 million shares at 90 cents apiece within 180 days. It is unclear when and if those additional investments will roll in since the stock has traded below the 90-cent mark during seven days this month.
“I’m confident the warrants will be exercised and that will give the company an additional $30 million,” Serruya told WWD in April. “That means American Apparel will have $45 million in cash to open new stores and for capital expenditures and to pay off debt.”
The company’s shares fell 4 cents, or 4 percent, to 96 cents Tuesday ahead of the company’s annual meeting as the S&P Retail Index had its best day in almost seven months. It gained 11.74 points, or 2.3 percent, to 519.39 as the Dow Jones Industrial Average gained 109.63 points, or 0.9 percent, to land at 12,190.01.
Although lifted by renewed optimism about the severity of the Greek debt crisis, specialty retailers were among the big winners on Wall Street Tuesday. Among the retailers gaining strongly were Destination Maternity Corp., up 8.8 percent to $18.77; Ann Inc., 4.4 percent to $27.56; Guess Inc., 4 percent to $43.24, and Limited Brands Inc., 3.1 percent to $37.48.