Revlon Says Bond Investors May Not Get Paid if Exchange Fails
Revlon Says Bond Investors May Not Get Paid if Exchange Fails
(Bloomberg) -- Revlon Inc. issued a stark warning to bond investors, saying their holdings may be jeopardy if they don’t take part in the company’s proposed debt exchange.
The cosmetics company is seeking to buy back $345 million of 5.75% bonds due next year at a steep discount to face value. It’s struggled to convince investors to participate in the deal, and extended an early participation deadline after receiving just 11% of the bonds.
“If you do not act now to participate in the company’s pending exchange offer, repayment of your notes will be at risk,” the company said in a letter Monday signed by Chief Executive Officer Debra Perelman.
Revlon created a public website with information about the exchange, including the letter, which twice emphasizes the potential risk of non-repayment. Investors who turn in their bonds by Oct. 22 are eligible to receive $325 in cash for every $1,000 of notes they submit.
The bonds last changed hands Oct. 9 at 33.875 cents on the dollar, according to Trace.
Revlon, struggling with store closings and light foot traffic amid the pandemic, needs holders of 95% of the bonds to exchange their notes to complete the deal. If the company can’t finish the debt swap, it risks hitting a Nov. 16 trigger date that would make more than $1 billion of secured debt come due. Revlon disclosed around $344 million of liquidity in September.
“The company has been dealing as best it can with a difficult business environment, particularly in the face of the ongoing and prolonged Covid-19 pandemic, which is putting a strain on the company’s cash resources and liquidity,” Perelman wrote in the letter. “Your participation is extremely important.”
The final deadline for the exchange is Oct. 27. The company’s latest offer has seen slightly better participation than an earlier proposal that garnered just 5% interest.
Even before the pandemic, Revlon was struggling to remain relevant and reverse falling sales amid steep competition from Estee Lauder Cos. and a host of smaller companies that have used social media to lure away customers. The company is controlled by Ron Perelman’s MacAndrews & Forbes.
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