Revlon has struck an settlement with collectors to present lenders and bondholders possession of the bankrupt cosmetics maker and wipe out the pursuits of Ron Perelman, the tycoon who has managed it for many years.
Based on a restructuring assist settlement made public on Monday, the corporate would goal to boost $650mn in new fairness and search to exit the Chapter 11 chapter course of by April in non-public fingers. Nearly all of its new possession could be held by senior lenders.
Revlon filed for chapter in June because it struggled with a $3.3bn debt load, a working capital crunch and provide chain issues. The corporate’s shares subsequently underwent a fleeting rally as retail traders embraced it as a so-called meme stock.
Nonetheless, troublesome financing situations and a weakening financial system soured traders’ hopes. The brand new Revlon is about to have complete debt of $1.4bn, although its proposed enterprise worth has not been finalised, mentioned an individual conversant in the negotiations.
The proposed settlement permits Revlon and its collectors to keep away from a messy combat over its property. The disputes stemmed from 2020, within the early days of the pandemic, when the corporate struck a deal to boost $880mn of latest capital from hedge funds that claimed mental property such because the Elizabeth Arden and Almay manufacturers as collateral.
One other group of traders which had not participated within the new financing later sued Revlon, alleging that the model property had beforehand been pledged to them in reference to a earlier mortgage.
Later in 2020, Citigroup, an administrator of Revlon loans, mistakenly repaid $900mn of the sooner mortgage. A gaggle holding $500mn of these loans selected to not return the mis-wired funds to the US financial institution.
Revlon advised the New York chapter courtroom that uncertainty over the identities of its collectors made if harder to boost recent capital and keep away from a chapter submitting. A New York federal appeals courtroom earlier this yr ordered the hedge funds to return the mistaken funds to Citigroup, a call that hastened negotiations of a restructuring settlement.
Perelman’s daughter, Debra, is the chief government of Revlon. The restructuring settlement requires her present employment settlement to be honoured as effectively a newly agreed severance plan.
Ron Perelman first acquired Revlon in 1987. Whereas it thrived for years with supermodel endorsers, it will definitely turned susceptible to upstart magnificence manufacturers and was weighed down by the debt from its 2016 acquisition of Elizabeth Arden.
The restructuring plan might be voted on by collectors and requires approval by the chapter courtroom.