Revlon to Avoid Bankruptcy Filing Upon Completing Debt Deal

(Bloomberg) -- Revlon Inc. says it got enough support from investors to close its debt exchange and pay down remaining obligations, eliminating the potential for a bankruptcy filing in the near future.

The cosmetics company said in a statement Thursday that bondholders agreed to exchange about 69% of the company’s $343 million of bonds due 2021. Revlon had to come up with a way to pay down or otherwise eliminate the the debt by Nov. 16 to avoid triggering a cascade of other obligations coming due. Revlon said it will pay off the $106.8 million of notes not turned in to the swap at 100 cents on the dollar plus accrued interest.

The exchange offer is the latest effort by billionaire Ronald Perelman’s cosmetics empire to ease its debt load and buy more time to focus on a business turnaround. Revlon said it determined all the conditions of the exchange were met and expects the deal to close Friday.

“As a result, the company does not expect that any bankruptcy or insolvency proceeding will be necessary,” the statement said.

Revlon shares surged as much as 14.7% Thursday morning before giving back some gains. The stock rose 37 cents to $11.14 at 10:16 a.m. in New York.

The cosmetics company has been trying to exchange or otherwise retire the bonds to avoid triggering more than $1 billion of secured debt payments. After receiving weak investor interest for earlier iterations of the deal, it warned that bankruptcy was a possibility if the swap failed and it lacked the liquidity to redeem the bonds.

The deal eliminates certain bondholder protections, including some default provisions, for investors who hang onto the notes before Revlon pays them off in full on Dec. 14. Exchange participants receive cash or a combination of cash and new loans at a discount to par.

Revlon 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. It’s also dealing with the impact of the Covid-19 pandemic on its business, employees and supply chain.

The exchange “represents an important step towards strengthening our capital structure and better positions us to focus on our future growth,” Chief Executive Officer Debra Perelman said in the statement.

The New York-based company has more than 15 brands, including Elizabeth Arden and Elizabeth Taylor, which it markets in more than 150 countries. Revlon has been working for months to tame its debt load and won lender support to refinance $1.8 billion of debt earlier this year despite resistance from some investors.

Revlon is scheduled to report its third quarter earnings results Thursday and will host a conference call at 5 p.m. in New York.

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