Revlon avoiding bankruptcy filing after debt deal

Cosmetics company eases debt crisis amid falling sales, pandemic

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 per cent of the company’s $343 million (U.S.) of bonds due 2021. Revlon had to come up with a way to pay down or otherwise eliminate 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 per cent Thursday morning before giving back some gains. The stock rose 7.80 per cent to close at $12.02 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 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 COVD-19 pandemic on its business, employees and supply chain.

The New York-based company has more than 15 brands.