American Apparel Gets the Perfect Investor: Creepy, Savvy Billionaire Ron Burkle
American Apparel (APP) needs help, both with money and with cleaning up its sleazy image. A rescuer on the first front may be at hand -- billionaire Ron Burkle, who recently disclosed he's acquired 6 percent of the company's stock for the bargain price of just under $6 million. Unfortunately, the association with Burkle will do nothing to clean up the image of either American Apparel, known for its nearly-nude ad models, or CEO Dov Charney, who's been sued for sexual harrassment.
You see, Burkle is sort of like another Charney, only even richer. Google Burkle's name and a couple of stories will pop right up -- the one from an unpublished chapter of a Paris Hilton biography about how he reportedly paid Hilton to participate in girl-on-girl sex for his viewing pleasure, and the one about how he owed former President Bill Clinton money. With American Apparel possibly just days from bankruptcy -- a key debt payment is due later this week -- the company has been frantically scrambling around, looking for a way to stave off financial Armageddon. It's been rumored existing investor Lions Gate Capital may bail the chain out, despite the steady stream of negative press recently over company practices such as allegedly hiring employees on the basis of full-body photos. But maybe they won't.
Into this mess steps Burkle, apparently smelling a bargain -- which is what he does when he's not out on the town. He's so well-known for his personal life, though, that a recent Bloomberg Businessweek profile on his financial dealings was titled, "The Other Ron Burkle."
He bought and sold Whole Foods stock through the downturn at a reported 200 percent profit, and made his first big kill selling the Fred Meyer chain to Kroger (KR) back in 1998. He's got nothing to offer in terms of improving American Apparel's image, but he could be just what the doctor ordered on the financial front. You see, Burkle likes to acquire large stakes in troubled companies, then start influencing what they do, improve operations, and sell out at a huge profit.
Burkle has been frustrated in recent attempts to acquire large stakes and influence doings at Barneys New York (BNNY) and Borders (BGP) Barnes & Noble (BKS), but he may have more luck here. He could be the ideal investor to help Charney shape things up at American Apparel. These two guys have a lot in common in terms of their personal proclivities -- maybe Burkle can have a playboy-to-playboy talk with him and get Charney to pull it together and focus on making the apparel chain profitable.
Photo via Flickr user Charline Tetiyevsky Related:
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- Why Dov Charney's Controversial Hiring Practices Won't Hurt American Apparel
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- A Guide to Who's Screwing Who in American Apparel's "F-- the People" Ad
- U.K. Officials Say American Apparel Ad Is Too Close to Child Porn