The avante garde clothing company American Apparel has recently received a purchase offer from Irving Place Capital with a maximum valuation of $1.40 per share. At the median offer price, the company would sell for roughly $235 million, a sum that comes across with incredible disappointment to an unnamed source within the company, as reported by Reuters.
It is easy to understand the disappointment in that price, as the company peaked in terms of price per share at $16.80, in December of 2007. As further stated by Reuters’ source, “This is the worst time imaginable to sell the company as it is on the verge of turning around and realizing its true value.” The particular details of American Apparel’s plan to turn things around remain undisclosed at this time. An official statement from the clothing company read, “The board takes these matters seriously, and it will evaluate this proposal in the ordinary course of business,” as reported by Fortune.
As dismal as the offer appears, it still comes with certain conditions attached. Among them are an agreement with Founder and former Chief Executive Officer Dov Charney to allow the sale, and for current loan packages to remain uninterrupted. American Apparel had suspended Charney in June for the alleged misuse of company funds, and for helping to distribute nude photos of a former employee.
Charney has been a controversial figure over the years. He has presented a multifaceted public persona, and over time been viewed largely as an innovator in retail practices, a staunch advocate of American manufacturing, and a leader in paying fair wages to his employees, while also raising eyebrows for his odd behavior at times, and history of legally and morally nebulous sexual antics. The American Apparel founder, in a meeting with reporters from the Los Angeles Times after having suit filed against him for the alleged sexual harassment of four former employees in 2011, showed the reporters sexually explicit emails and nude photographs of the women to prove his claim that all encounters were consensual. While the motivation behind the disclosure may be understood within the context of proving his innocence at the time, it remains in poor taste and questionable necessity.
Charney contended at the time that he saw no ethical conflicts in a CEO having sexual relations with employees. The story in the L.A. Times, linked below in the sources, goes on to describe Charney’s further courting of reporters by invitation to dinner at a Korean Barbecue restaurant, along with a friend and author who will not be named in this report. The dinner had overtones which suggested the aesthetic of an affiliate marketing seminar, as conversation at that time surrounded self-improvement books written by the author friend who was present.
While Charney had been suspended from his executive position six months ago, he had remained employed as a consultant to the company until last week. As it stands, Charney’s stake in American Apparel, 43 percent, is controlled by Standard General, a hedge fund who received conservatorship over the shares as loan collateral. In the slightest glint of silver to an otherwise darkly-lined cloud, American Apparel shares closed the day up 6.5 percent today, at $1.14.
By Brian Whittemore
Photo Courtesy of Nathan Rupert – Flickr License