Dov Charney's not going anywhere. At least not anytime soon.
The controversial CEO--who has been accused of sexual harassment by several former employees in recent weeks--has secured financing that will stave off bankruptcy and give the company some breathing room on its debt, WWD is reporting.
The board has approved raising $15 million from a group of Canadian investors, with the option to receive $28 million invested during the next six months, the NY Post is reporting. "Dov is an eccentric, and he's being butchered by investors and the press," one of the Canadian lenders, Roy Sebag, told the Post.
Sebag, of Essentia Equity, seems to be the spokesperson for the group of Canadian investors throwing American Apparel a lifeline, helmed by financier Michael Serruya, who is responsible for bailing out Jamba Juice in 2009. He also explained to WWD “We are contrarian investors and look for opportunities where the market has discounted companies for reasons that are temporary...American Apparel is a perfect example of that. In my opinion, it’s one of the greatest brands that’s been created in the recent past — it went from zero to $550 million in sales in five years, has set countless trends, resonates with consumers around the world and is trading at a ridiculous valuation. Why? Because of sexual harassment lawsuits, an auditor resigning and employees being deported — which all makes for great headlines but has nothing to do with consumers around the world wanting to go into the stores and buying the product.”
As for what this means for Charney in terms of ownership stake in his company, WWD reports that his shares have been diluted by this latest deal. Never one to shy away from speaking to reporters, Charney has refused to comment on this positive development for his company, citing, according to the paper, "an imminent 8-K filing with the Securities and Exchange Commission."