From a cash flow perspective and assuming the initiatives begin shipping in the fourth quarter of 2005 as planned, working capital is expected to increase during the second half of the year and return to more normalized levels in relation to sales during the second quarter of 2006. In addition, the Company expects to increase its investment in permanent displays in 2005 and 2006, in order to execute the initiatives.
In connection with the initiatives, the Company indicated that it intends to increase to $185 million its previously announced commitment to issue $110 million of equity by March 31, 2006. The Company reiterated its commitment to use the proceeds of $110 million of the equity offering to reduce debt, with the balance available for general corporate purposes. The Company also announced that it intends to conduct a proposed debt financing to raise approximately $75 million in the third quarter of 2005, to help fund investments in the initiatives.
To the extent that the equity issuance is less than $185 million, MacAndrews & Forbes, the Company's principal shareholder, has agreed to back-stop the issuance by purchasing such additional equity as necessary to ensure that the Company raises the full $185 million. MacAndrews & Forbes has also agreed to extend the term of the Company's existing line of credit, which has current availability of $87 million, through the planned equity issuance to be consummated by March 31, 2006.
Revlon Inc is a worldwide cosmetics, skin care, fragrance and personal care products company. The Company's vision is to deliver the promise of beauty through creating and developing the most consumer preferred brands. The Company's brands, which are sold worldwide, include Revlon , Almay, Ultima, Charlie, Flex and Mitchum.