Since last June, when the cosmetics giant filed for Chapter 11 bankruptcy protection, a crucial step toward the rehabilitation of Revlon has been made.
Just a few months ago, the $3.7 Billion debt load left Revlon too cash-poor to make timely payments to critical vendors in its cosmetics supply chain. Now, a restructuring agreement will allow them to turn over ownership of the company to its lenders and wipe out current shareholders.
The deal has become possible because Revlon has regained the support of a faction of critical secured lenders and its unsecured creditors, who had previously been at odds during the company’s bankruptcy. Once approved by a U.S. bankruptcy judge, the restructuring agreement will take effect, providing $44 Million to Revlon’s unsecured creditors, who would otherwise be last in line for repayment of their debts.
Known as the Brandco lenders, the secured lender faction includes private equity and hedge funds such as Ares Management and Oak Hill Advisors, which are owed close to $3 Billion. The restructuring agreement requires Revlon to get court approval on April 3rd, a condition that would allow the company to exit bankruptcy on April 17th, 2023.
Following the potential exit from Chapter 11, Revlon might be looking for a sale as the restructuring agreement allows the company to accept offers from buyers as long as the amount is high enough to fully repay the Brandco lenders.
