Revlon ups credit line as part of restructuring
amendments to its financial operations as part of its plans to
restructure the company and recover after spending most of 2005 in
the red.
The plans include amendments to a bank credit agreement, an investment agreement with its majority owner, as well as the terms of its previously announced $110 million share offering.
The New York-based company, which markets make-up, skin care and deodorant brands such as Almay and Mitchum, struggled during the financial year 2005 and posted losses during its first three quarters of the year.
However, with the fourth quarter results due to be announced, the company is expecting to turn the corner and pull itself out of the red, having reaped the benefit of cost savings and restructuring that have been implemented throughout the year.
At the begining of this month the company said that it was expecting full year sales to rise 3 per cent, up from $1.3 billion in 2004, to reach $1.33 billion in 2005.
Moving ahead with the restructuring and extending its credit line, the company now says its operating subsidiary Revlon Consumer Products, will amend its original credit agreement from July 2004 to allow for organizational changes and new product launches.
The company has also entered into an agreement with Ronald Perleman to extend the firm's back-stop of $75 million equity issuance from the current deadline of March 31 to June 30, in an effort to provide sufficient time to complete its current public offering.
The operating subsidiary has also amended its 2004 $87 million line of credit with Perleman, extended it in line until the $75 million credit line is used up.
In line with its share issuance programme, the company also announced that it would distribute one transferable subscription right for each share of class A and B common stock held by each shareholder as part of its current $110 million rights offering.
Throughout 2005 Revlon has been attempting to inject greater dynamism in its brand portfolio, which has resulted in a heavy investment in the Almay brand, efforts that have increased the company's costs significantly.
However, those dividends are paying off, evinced by the third quarter results that showed signs of edging out of the red with a net loss of $65.4 million for the quarter, against a net loss of $91.6 million in the third quarter of 2004.
In turn the stronger results are forcing analysts to reconsider their ratings and forecasts. Indeed, back in January Prudential Financial analyst Constance Maneaty issued a 'favorable' rating on the cosmetics, household and personal care sector, stating that Revlon was a particularly favored investment.
