The saga surrounding embattled clothing retailer American Apparel took another interesting turn Wednesday when it announced that it was adding current RadioShack CEO and Director Joseph Magnacca to its board of directors. Magnacca has served as CEO of the struggling electronics retailer since February 2013.
The move was just part of an overhaul of the American Apparel board, which includes the replacement of all members except for current Co-Chairmen David Danziger and Allan Mayer, both of whom have served in that role since June 18 of this year. That was when the board removed founder Dov Charney as chairman, president and CEO of the company amid allegations of sexual harassment and misappropriation of corporate funds.
According to regulatory filings, the new board will consist of four new members who will join Danziger and Mayer. They include David Glazek, who works for Standard General, which is the hedge fund that has voting control over much of American Apparel's stock. Also joining the board will be TrueBlue Inc. director Colleen Brown, Media General director Thomas J. Sullivan, and RadioShack's Magnacca. The filing also indicated that Standard General has the ability to choose an additional person to serve as a director of the company, but that the individual has not been determined as of this time.
"I'm excited to be joining the American Apparel at such an important time. I believe that the newly formed board has the experience and expertise to take the brand in the right direction. I'm proud to be associated with such an iconic brand and a great "made in America" story!" Magnacca told CNBC.
The new board will have the tough task of figuring out whether ousted founder Charney will return in some capacity with American Apparel. According to the regulatory filing, Charney still has a near 43 percent stake in the company, and remains suspended as CEO until the board can determine whether he should be reinstated.
Both American Apparel and RadioShack have faced tough business challenges that have forced the equity values of each company towards depressed levels. American Apparel shares are still publicly traded, and the company is worth approximately $190 million, or $1.09 per share. Shares have lost 11 percent of their value this year, and 43 percent over the last 12 months.
RadioShack shares are worth approximately $84 million, or 83 cents per share. The stock has lost nearly 70 percent of its value in 2014 alone.
—By CNBC's Courtney Reagan and Dominic Chu