Revlon sets subscription price for share offering

By Simon Pitman

- Last updated on GMT

Related tags Vital radiance Stock Revlon consumer products Revlon

Troubled cosmetic giant Revlon has set the terms for its share
offering, a move that aims to repay mounting debts due to the
failed launch of its Vital Radiance cosmetic line for older women
earlier this year.

The company says it will distribute on transferable subscription rights for each share of class A and Class B stock held by shareholders as of December 11.

The subscriptions enable holders the right to buy 0.2308 of a share of class A common stock at a subscription price of $1.05 for each share. The rights holders are also entitled to subscribe for additional shares at the same subscription price.

The company is hoping to raise $100m from the share offering - $50m of which will be used to redeem the $50m the principal amount of the senior subordinated notes due in 2008 for Revlon subsidiary Revlon Conumer Products.

The rest of the proceedings will be used to repay debts under Revlon Consumer Products' $160m multi-currency revolving credit facility.

The subscription rights are expected to trade on the NYSE beginning December 20 and the offering will last until January 18, 2007 - the day before the expiration date for the rights offering.

The company also announced that it has gone to a third amendment to its existing $87m credit line with MacAndrew & Forbes. This agreement determines that once the rights offering is finished $50m from this credit line will be carried forward until Jan 30, 2008, under the same terms.

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.

The company 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. Last 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, the results were still in the red due to 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."

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