Revlon is preparing. C. The file existsChapter 11 Protection After years of struggling with excessive debt, stiff competition in the cosmetics sector, increasing inflationary pressures and recent supply chain stresses, people familiar with the matter said as soon as next week.
cosmetics factoryMacAndrews & Forbes, owned by billionaire Ron Perlman, is in restructuring talks with major lenders ahead of its debt maturity starting next year. The bankruptcy filing could end Mr. Perelman’s control of Revlon, which was bought by his own company in 1985.
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A person familiar with the matter said that the situation is flexible and that keeping the Chapter 11 file is not safe. Shares of Revlon fell 53 percent on Friday to $2.05 a share.
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Revlon declined to comment. Sales rebounded 8% last quarter as consumers’ shopping habits approached the scale of the outbreak. But the company’s outlook remains challenged by the need to raise capital for liquidity needs, according to an April report from S&P Global Ratings.
Reorg Research previously reported that Revlon plans to file for bankruptcy.
The earliest due date for the company’s debt is September 2023 and includes a $866 million loan that was repaid by managing agent Citigroup Inc. In 2020. With your own money instead of Revlon. Some lenders returned the money to Citi, while others withheld about $500 million in collateral payments.
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Citi sued them for the money, but a federal judge rejected his request last year. The bank has appealed, and the appeal decision is still pending. Revlon still owes the loan but the appeals court ruling.
Some of Revlon’s lenders believe there may be some logic in filing for bankruptcy sooner rather than before an appeal ruling is issued, according to a person familiar with their thinking.
This person said that bankruptcy court might be the best forum for untangling the messy tangle between Citi’s random payments and Revlon’s need to restructure its debt. The city declined to comment.
A person familiar with the matter said that if Citi loses its appeal, it can also require Revlon to repay the loan by the due date. But other people said Citi’s legal rights to demand loan repayments when due are not entirely clear.
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Maturities of Revlon’s remaining $3.3 billion of debt accumulate rapidly in 2024 and 2025. About half of the company’s debt is due by 2024, and the maturity of a $1.7 billion loan in 2025 accelerates to 2024 if the company is unable to repay the bonds maturing there general.
The company’s lenders were at odds even before Citi’s accidental repayment. In 2020, a group of hedge funds accused the company of illegally stripping it of secondary intellectual property rights such as American Crew, Elizabeth Arden, Almay and other brands.
Revlon used these brand assets to raise new funds that helped it weather the Covid-19 pandemic. Litigation over the debt transaction was halted when Citi repaid lenders in error.
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People familiar with the matter said that if an appeals court orders the refund, that lawsuit will likely be appealed and lenders, including Brigade Capital Management, HPS Investment Partners and others, will likely be involved in restructuring negotiations. They did not immediately respond to requests for comment.
Andrew Scoria contributed to this article.
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