Revlon Seeks to Buy Time With Debt Swap Amid Pandemic Sales Drop
(Bloomberg) -- Cosmetics giant Revlon Inc. is asking its bondholders for more time to repay borrowings due next year as it seeks to ride out pressures from the Covid-19 pandemic.
The makeup company, hit hard by store closings to contain the virus, is seeking to exchange its 5.75% bonds due in 2021 for new notes with the same coupon maturing in 2024, the firm said in a regulatory filing Monday. The move would give the company more time to manage its debts as it focuses on executing its turnaround plan.
Revlon is asking bondholders to take a haircut of 20 to 25 cents on the dollar from par value of 100 cents. Investors who exchange their notes by 5 p.m. in New York on August 7 are eligible to receive $750 of principal and a $50 premium for every $1,000 of bonds they turn in.
The final deadline for the exchange, with less favorable terms for bondholders, is 11:59 p.m. on August 21. The offer is contingent on the participation of 95% of bondholders and consent from Revlon’s term loan lenders. Investors who don’t participate risk having protections known as covenants removed from their holdings.
The company’s $450 million of 2021 bonds last changed hands in June at around 65.25 cents on the dollar, according to Trace.
The exchange is Revlon’s latest effort to ease its debt load. It recently lined up support from lenders to refinance $1.8 billion of debt, despite resistance from some investors.
The company said in the filing that it had about $396 million of liquidity on July 17. It estimated that the pandemic was responsible for almost all of its 39% net sales drop in the three months through June compared to a year earlier. To help offset the decline, the company cut costs by furloughing office and factory workers and suspending certain salary increases and retirement matches.
Revlon, controlled by Ron Perelman’s MacAndrews & Forbes, has struggled to remain relevant and stem falling sales amid competition from Estee Lauder Cos. and a host of smaller companies that have used social media to lure away customers. Revlon has more than 15 brands, including Elizabeth Arden and Elizabeth Taylor, which it markets in more than 150 countries.
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