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Revlon announces plans to retire debt of $170 mn
04 Sep '08
5 min read
Revlon Inc announced that it plans to reduce its debt by $170 million by repaying the $170 million MacAndrews & Forbes Senior Subordinated Term Loan (the "M&F Term Loan"), which matures on August 1, 2009. The debt reduction would be achieved in two steps.
In the first step, Revlon will use $63 million of the net proceeds from the previously announced July 2008 sale of its Bozzano business in Brazil to repay $63 million of the $170 million M&F Term Loan. The remaining approximately $30 million of net cash proceeds from the sale of the Bozzano business will be used by the Company for general corporate purposes.
In the second step Revlon intends to launch, as early as in the fourth quarter of 2008, a $107 million equity rights offering that would allow stockholders to purchase additional shares of Revlon Class A common stock. Upon closing the rights offering, Revlon intends to use the net proceeds of such equity issuance to fully repay the remaining balance of the M&F Term Loan.
Commenting on today's announcements, Revlon President and Chief Executive Officer, David Kennedy said, “By repaying the M&F Term Loan, we will eliminate our highest cost, nearest maturity debt, which carries an annual cash interest cost of almost $19 million. Improving our capital structure with this important step is consistent with a key aspect of our strategy."
Reverse Stock Split:
Revlon intends to effect its previously announced 1-for-10 reverse stock split of its Class A and Class B common stock on September 15, 2008, and open for trading on the NYSE on a post-split basis on September 16, 2008.
Details on the $107 Million Rights Offering:
Pursuant to the rights offering, Revlon would distribute at no charge to each stockholder of record of its Class A and Class B common stock, on a record date to be set by the Board or an authorized committee of the Board, transferable subscription rights that would enable such stockholders to purchase shares of Class A common stock at a subscription price to be determined by a committee of Revlon's Board of Directors composed solely of independent directors within the meaning of Section 303A.02 of the NYSE Listed Company Manual, the SEC's Regulation S-K and the Board's Guidelines for Assessing Director Independence, and based on market conditions at the time of the rights offering.
Revlon would contribute the net proceeds of the rights offering to Revlon Consumer Products Corporation, Revlon's wholly-owned operating subsidiary, in order to fund the repayment of the remaining balance of the M&F Term Loan.
Pursuant to an over-subscription privilege, each rights holder that exercises its basic subscription privilege in full could also subscribe for additional shares at the same subscription price per share, to the extent that other stockholders do not exercise their subscription rights in full. If an insufficient number of shares is available to fully satisfy the over-subscription privilege requests, the available shares would be sold pro-rata among rights holders who exercised their over-subscription privilege, based on the number of shares each rights holder subscribed for under the basic subscription privilege.
In the first step, Revlon will use $63 million of the net proceeds from the previously announced July 2008 sale of its Bozzano business in Brazil to repay $63 million of the $170 million M&F Term Loan. The remaining approximately $30 million of net cash proceeds from the sale of the Bozzano business will be used by the Company for general corporate purposes.
In the second step Revlon intends to launch, as early as in the fourth quarter of 2008, a $107 million equity rights offering that would allow stockholders to purchase additional shares of Revlon Class A common stock. Upon closing the rights offering, Revlon intends to use the net proceeds of such equity issuance to fully repay the remaining balance of the M&F Term Loan.
Commenting on today's announcements, Revlon President and Chief Executive Officer, David Kennedy said, “By repaying the M&F Term Loan, we will eliminate our highest cost, nearest maturity debt, which carries an annual cash interest cost of almost $19 million. Improving our capital structure with this important step is consistent with a key aspect of our strategy."
Reverse Stock Split:
Revlon intends to effect its previously announced 1-for-10 reverse stock split of its Class A and Class B common stock on September 15, 2008, and open for trading on the NYSE on a post-split basis on September 16, 2008.
Details on the $107 Million Rights Offering:
Pursuant to the rights offering, Revlon would distribute at no charge to each stockholder of record of its Class A and Class B common stock, on a record date to be set by the Board or an authorized committee of the Board, transferable subscription rights that would enable such stockholders to purchase shares of Class A common stock at a subscription price to be determined by a committee of Revlon's Board of Directors composed solely of independent directors within the meaning of Section 303A.02 of the NYSE Listed Company Manual, the SEC's Regulation S-K and the Board's Guidelines for Assessing Director Independence, and based on market conditions at the time of the rights offering.
Revlon would contribute the net proceeds of the rights offering to Revlon Consumer Products Corporation, Revlon's wholly-owned operating subsidiary, in order to fund the repayment of the remaining balance of the M&F Term Loan.
Pursuant to an over-subscription privilege, each rights holder that exercises its basic subscription privilege in full could also subscribe for additional shares at the same subscription price per share, to the extent that other stockholders do not exercise their subscription rights in full. If an insufficient number of shares is available to fully satisfy the over-subscription privilege requests, the available shares would be sold pro-rata among rights holders who exercised their over-subscription privilege, based on the number of shares each rights holder subscribed for under the basic subscription privilege.
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