Revlon repays debt to cut costs
The US-based cosmetics company will be paying off $170m of debt (a MacAndrews and Forbes senior subordinated term loan which matures on August 1 2009).
Proceeds from Brazilian sale help repayment
In order to finance the repayment Revlon will use $63m of proceeds from the sales of a number of its Brazilian lines in July this year.
Revlon estimate that a further $30m in proceeds will remain from the Brazilian sales which it will use for general corporate purposes.
The repayment of the remaining $107m of the loan will be financed from an equity rights offering allowing stockholders to purchase additional shares of Revlon stock.
“By repaying the MacAndrews and Forbes Term Loan, we will eliminate our highest cost, nearest maturity debt, which carries an annual cash interest cost of almost $19m. Improving our capital structure with this important step is consistent with a key aspect of our strategy,” said Revlon president and CEO David Kennedy.
Decision follows healthy quarter
Revlon has recently released its second quarter results for the year illustrating the company’s increasingly successful recovery after several years of difficult trading.
Strong sales growth helped the company record a net profit of $20m compared to a net loss of $11.3m in the corresponding quarter last year.
Net sales rose 8 percent to $375m due largely to higher shipments of color cosmetics following a number of new product launches, according to Revlon.
Favorable exchange rates also played a role but organic growth was still high at 6 percent.
Margins widened during the quarter as operating profit jumped from $16.9m to $60m.
Commenting on the results, which beat analysts’ expectations, Revlon president and CEO David Kennedy said: "We have demonstrated continued progress in the first half of the year."