Revlon bondholders agree to trade in notes or risk bankruptcy

By Becky Bargh | 30-Oct-2020

The group has lent on bondholders to trade in their notes for cash as it attempts to complete a $343m bond swap

An ad hoc group of Revlon bondholders have agreed to turn in their 5.75% senior notes, which are not due until 2021, as pressure mounts on the firm to pay its creditors.

The make-up giant has a two week deadline to complete a US$343m bond swap or eliminate the lender notes.

If the group is unsuccessful, it will trigger a $1bn loan repayment in mid-November, which the group reportedly cannot pay.

The group has lent on bondholders on several occasions to ease the stresses of the coronavirus pandemic and to turn in their holdings or risk the firm’s future.

In a letter to holders, signed by Revlon’s CEO Debra Perelman, dated 26 October, it wrote: “We are sending this letter, together with a new offering book in connection with our extension of deadlines relating to the offer to exchange your notes.”

Bondholders have been offered $325 cash back for every $1,000 note tendered if cashed before the end of 5 November.

If notes are tendered after the deadline, holders will receive $275 cash for every $1,000 note.

Perelman added: “As you may have heard, 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.

“Under the company’s credit agreements, if a large portion of the 5.75% notes remain outstanding after November 15, 2020, most of the company’s debt will accelerate and become payable on that date.

The announcement comes as a relief after the group failed to garner much interest from holders in previous months.

In Revlon’s initial attempt to complete a debt swap it drew just 5% participation.

However, reports suggest some of the company’s bondholders are counting on Revlon’s owner Ron Perelman, father of the firm’s CEO, for a bail out if it is unable to muster interest from holders.

Cosmetics Business has reached out to Revlon for comment.

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