- MAP Asia Pacific Ltd
Revlon Nears Creditor Support for Deal to Avoid Bankruptcy
NEW YORK, United States — Revlon Inc. is close to gaining enough support from bondholders to eliminate a key piece of debt and avoid a bankruptcy filing, according to people with knowledge of the matter. The stock surged more than 60 percent.
The cosmetics company said Wednesday that bondholders have now agreed to tender about 69 percent of a $343 million bond issue that must be paid down by next week to avoid a cascade of other debt payments. While that’s short of Revlon’s original goal, the company is expecting additional holders to sign on and is contemplating whether to close the exchange, the people said, asking not to be identified discussing a private matter.
The pending plan is the latest by billionaire Ronald Perelman’s cosmetics empire to ease its debt load and buy more time to focus on a business turnaround. The company needs to make a deal by November 16 to avoid triggering the repayment of more than $1 billion of secured debt.
Talks between the company, its bondholders and advisers are fluid and could change, the people said. Revlon could still decide to file for bankruptcy in the coming days depending on the outcome of discussions.
Revlon shares surged after Bloomberg reported that the exchange could close this week, triggering a trading halt. The stock jumped as much as $5.77 a share to $14.56.
Certain lenders who disagreed with Revlon’s earlier transactions have dropped their opposition and will support the company going forward, the people said. The makeup company is likely to have enough support for the deal to avoid triggering the broader repayment, they added.
Revlon has been trying to exchange or otherwise retire roughly $343 million of unsecured bonds. The company warned that it may need to file for bankruptcy if the swap failed and it lacked the liquidity to otherwise take out the bonds.
Representatives for Revlon and Perelman’s holding company MacAndrews & Forbes declined to comment.
As of Tuesday evening, $236.5 million of the bonds had been turned in, according to the statement. Results are preliminary and Revlon said it may decide to extend the exchange. It will determine by Friday whether it has fulfilled conditions like minimum liquidity necessary to complete the swap.
Revlon has struggled to remain relevant and stem falling sales amid competition from Estée 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.