Revlon rolls out refinancing package to stave off debt
existing credit agreement as a means of strengthening its balance
sheet and increasing its investment levels, a move that will be
backed up by a share holder offering.
The company will make a $100 million rights offering during December that aims to allow stockholders to buy additional shares of its Class A stock.
The proceeds of the offering will be used to reduce debts, with approximately $50m of the proceeds of the offering being used to repay debt on its outstanding $160m revolving credit facility.
The company will also be refinancing and replacing its existing $800m loan with a new 5-year $840m term loan facility, as well as amending its existing $160m multi-currency revolving credit facility and extending it maturity to a five-year period.
The new credit facilities, alongside the share offering, will be used to repay approximately $800m in outstanding debts, which the company has been struggling to pay off in the face of disappointing sales results this year.
News of the refinancing package was well received by the financial world, with the company's shares rising six per cent to reash $1.61 at the close of trading on the New York Stock Exchange yesterday.
Revlon hit the rocks earlier this year, after a significant investment in the marketing and distribution of its Vital Radiance cosmetics line for older women met with limited success with US consumers.
Revlon subsequently pulled the line and said that refinancing would form an integral part of its recovery plan, as a means of helping to contain the company's debts.
Earlier this month the company announced that its net sales for the third quarter had risen by 11 per cent to reach $306m, but despite the good news on the sales front, losses were still running high, with considerable expenses for the discontinuation of the Vital Radiance line contributing to a $57m operating loss for the period.
Newly appointed CEO David Kennedy said of the company's quarterly results, "Our performance in the third quarter was significantly impacted by the costs of the decisions we announced in September. We continue to expect net sales for the full year 2006 to be approximately $1,340 million, including the impact of Vital Radiance returns and allowances provisions taken during the year."
