With their recent 1.54M share purchase @ $.91/share of American Apparel Inc (NYSEMKT:APP), Standard is within 190k shares of tripping the rights offering enacted by the company on 6/27
American Apparel’s Charney files 13d/A
On June 23rd Charney filed this 13d/A:
Item 4. Purpose of Transaction.
Item 4 is hereby amended and supplemented as follows.
On June 18, 2014, the Board of the Issuer notified Dov Charney of the Board’s intent to terminate his employment as the Company’s President and Chief Executive Officer, for cause under Mr. Charney’s employment agreement following a 30-day cure period required under the terms of his employment agreement. Mr. Charney believes that such termination is without merit and intends to contest it vigorously. Effective immediately, the Board suspended Mr. Charney pending the expiration of such cure period. The Board has notified Mr. Charney that it intends to request his resignation from the Board concurrently with the effective time of his termination of employment. The Board also removed Mr. Charney as Chairman of the Board effective immediately.
Following the announcement on June 18, 2014, made by the Issuer of its intent to terminate Mr. Charney’s employment, Mr. Charney was approached by certain persons (the “Supporters”), including stockholders of the Issuer, who expressed support for his continued leadership of the Issuer. On June 19, 2014, Mr. Charney began to discuss with the Supporters potential changes to the composition of the Board and management of the Issuer.
American Apparel’s Charney and supporters may be deemed to constitute a group
As a result of Mr. Charney’s discussions with the Supporters described above, Mr. Charney and the Supporters may be deemed to constitute a “group” under Rule 13d-5(b)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission that Mr. Charney is a member of a group with the Supporters for purposes of Section 13(d) of the Exchange Act or for any other purpose, and such membership is expressly disclaimed. In addition, neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission that Mr. Charney is the beneficial owner of any Common Stock beneficially owned by the Supporters for purposes of Section 13(d) of the Exchange Act or for any other purpose, and such beneficial ownership is expressly disclaimed.
Mr. Charney intends to engage in discussions with the Issuer and Issuer’s management and the Board, other stockholders of the Issuer and other persons that may relate to the afore mentioned matters and/or other matters related to governance and board composition, management, operations, business, assets, capitalization, financial condition, strategic plans and the future of the Issuer. Mr. Charney may also take one or more of the actions described in subsections (a) through (j) of Item 4 of Schedule 13D, and may discuss such actions with the Issuer and the Board, other stockholders of the Issuer and other persons.
American Apparel’s right offering
The Right Offering from 6/27 states:
Item 3.03. Material Modification to Rights of Security Holders.
On June 27, 2014, a duly authorized committee (the “Committee”) of the Board of Directors (the “Board”) of American Apparel Inc (NYSEMKT:APP) (the “Company”) declared a dividend distribution of one right (a “Right”) for each outstanding share of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) to shareholders of record at the close of business on July 10, 2014 (the “Record Date”). Each Right entitles the registered holder to purchase from the Company a unit consisting of one ten-thousandth of a share (a “Unit”) of Series A Junior Participating Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), at a purchase price of $2.75 per Unit, subject to adjustment (the “Purchase Price”). The description and terms of the Rights are set forth in a Rights Agreement, dated as of June 27, 2014 (the “Rights Agreement”), between the Company and Continental Stock Transfer & Trust Company as Rights Agent.
Following is a summary of the terms of the Rights Agreement. The following summary is qualified in its entirety by reference to the Rights Agreement, a copy of which is attached hereto as Exhibit 4.1 and is incorporated herein by reference.
Rights Certificates; Exercise Period. Initially, the Rights will be attached to all Common Stock certificates representing shares then outstanding, and no separate rights certificates (“Rights Certificates”) will be distributed. Subject to certain exceptions specified in the Rights Agreement, the Rights will separate from the Common Stock and a distribution date (“Distribution Date”) will occur upon the earlier of (i) 10 business days following a public announcement that a person or group of affiliated or associated persons (an “Acquiring Person”) has acquired beneficial ownership of fifteen percent (15%) or more of the outstanding shares of Common Stock (the “Stock Acquisition Date”), other than as a result of (a) preexisting beneficial ownership of Common Stock in excess of fifteen percent (15%) at the time of public announcement of the Rights Agreement (provided such person or group does not acquire an additional one percent (1%) of the outstanding shares of Common Stock), (b) repurchases of stock by the Company, (c) certain inadvertent actions by institutional or certain other stockholders or (d) the acquisition of stock pursuant to a Qualified Offer (as defined below), and (ii) 10 business days (or such later date as the Board shall determine) following the commencement of a tender offer or exchange offer (other than a Qualified Offer) that would result in a person or group becoming an Acquiring Person. For purposes of the Rights Agreement, beneficial ownership is defined to include ownership of derivative securities.
American Apparel’s Charney not deemed to beneficially own securities
Under the terms of the Rights Agreement, American Apparel Inc (NYSEMKT:APP)’s Dov Charney will not be deemed to “beneficially own” any of the securities beneficially owned by Standard General L.P. (“SG”), as referenced in Amendment No. 13 to the Schedule 13D dated December 12, 2007, filed by Mr. Charney on June 27, 2014, solely by reason of the letter agreement dated June 25, 2014, between Dov Charney and SG (the “Letter Agreement”). However, Mr. Charney shall be deemed to “beneficially own” all such securities beneficially owned by SG upon either (i) entry into the definitive loan documents contemplated by the Letter Agreement, (ii) entry into the cooperation agreement contemplated by the Letter Agreement, (iii) any purchase of securities by Mr. Charney from SG following execution of the Letter Agreement or (iv) entry into any other agreement, arrangement or understanding with SG which would otherwise give Mr. Charney beneficial ownership of the securities beneficially owned by SG.
Until the Distribution Date, (i) the Rights will be evidenced by the Common Stock certificates (or, in the case of shares reflected on the direct registration system, by the notations in the book entry accounts) and will be transferred with and only with such Common Stock, (ii) new Common Stock certificates issued after the Record Date will contain a notation incorporating the Rights Agreement by reference and (iii) the surrender for transfer of any certificates for Common Stock outstanding will also constitute the transfer of the Rights associated with the Common Stock represented by such certificates. Pursuant to the Rights Agreement, the Company reserves the right to require prior to the occurrence of a Triggering Event (as defined below)