American Apparel Inc. (NYSEMKT:APP), which was rocked by the exit of founder and CEO Dov Charney for alleged misconduct, revealed the names of four new board members on Wednesday, including the first female director in the history of the retail company.
Colleen B. Brown, former CEO of media firm Fisher Communications Inc. (NASDAQ:FSCI) and three other executives will reportedly join the two co-chairmen of the old board, David Danziger and Allan Mayer. The Los Angeles-based company fired its controversial and storied leader, Charney, in June. And, the decision for a revised board was reportedly part of a deal that American Apparel struck with Standard General, a New York investment firm, which bought 27 million shares in the company in June.
“This slate of directors brings significant financial, retail, and corporate turnaround expertise to the board,” David Glazek, a partner at Standard General who will also be part of the new board, reportedly said, in a statement. Glazek reportedly added that he will be working with the board members “to leverage the company’s strong brand for the benefit of shareholders, creditors, employees, and the Los Angeles community.”
The other directors include RadioShack (NYSE:RSH) CEO Joseph Magnacca and Thomas J. Sullivan, managing partner at a financial advisory firm and an expert on corporate turnarounds, and Soo Kim, Standard General's chief investment officer, according to the New York Times. The new board is expected to come into effect from Aug. 2.
As part of an agreement, Standard General was given the authority to select three new board members, while two other members were to be mutually selected by the firm and the company. Standard General is yet to fill one remaining seat, and the announcement is expected to be made soon.
Charney was fired last month after the board learned that he allegedly allowed an employee to publish nude pictures of a former company employee, Irene Morales, in 2011. Charney’s lawyer accused the board of acting illegally and filed an arbitration petition to block his dismissal. Four other board members also reportedly resigned from the company.
Charney teamed up with Standard General to acquire about 43 percent of the company’s shares, but the deal was made under the condition that his voting rights must be approved by the firm. The investigation on Charney, which is being carried out by FTI Consulting Inc. (NYSE:FCN), is still underway.
American Apparel has posted nearly $270 million in losses in the last four years, has more than $200 million in debt, and faces an interest payment of $13.5 million to bondholders in October.
According to the Los Angeles Times, some analysts have raised doubts about the new board members because of their lack of experience in the retail industry.
"This is not exactly what I can call an all-star lineup," Lloyd Greif, CEO of investment banking firm Greif & Co, said, according to the LA Times. "This is not the inspired board choices you would have hoped to see."