NEW YORK — Revlon is burning cash even faster than anticipated and the company is expected to seek amendments or waivers from lenders to keep it from falling out of compliance with current credit agreements.

Revlon has already gone through a $100 million loan from owner Ronald Perelman’s MacAndrews & Forbes Holdings Inc. and has drawn the full amount from another MacAndrews till that provided a $40 million to $65 million credit line. Of that $65 million, $25 million was to have been deferred until January 2004.

In another symptom of its weak financial condition, unlike homeowners who have been snapping up lower mortgage terms, Revlon was forced to extend the deadline on $80.5 million worth of notes at a higher interest rate last week. Revlon Holdings LLC filed a prospectus with the Securities and Exchange Commission Friday to exchange senior secured notes due in 2004, issued at a 12 percent interest rate, for new notes at a 13 percent rate maturing in 2007.

And according to the S-4 filing, the company fully expects to seek additional waivers for other credit agreements that expire on Jan. 31, 2004. Due to its cash shortage, Revlon said it will not be able to meet requirements of its covenants including a minimum $20 million of liquidity at all times.

George Chalhoub, an analyst with Deutsche Bank, said he expects that talks between Revlon and its lenders will come to a conclusion within the next few weeks. “The banks will make a decision to agree to some waivers or not to agree to waivers,” said Chalhoub, who issued a report in August expressing concern about “Revlon’s ability to stabilize and potentially regrow its EBITDA by year-end 2003.”

The Deutsche Bank analyst projects Revlon’s EBITDA will weaken by year-end, “and, barring another cash infusion, will have insufficient funds to operate beyond fourth quarter 2003.”

Should lenders not agree to new terms, Revlon indicated it would consider several actions including: refinancing the existing credit agreement, selling off assets or operations, seeking additional contributions from MacAndrews or issuing new Revlon stock.

A MacAndrews and Forbes spokesman said because the firm was involved in the registration process with the S.E.C., he was not able to comment further. Revlon executives did not return calls for comment.GPC Buys Standard Goods

NEW YORK — GPC Sales of Little Ferry, N.J., has acquired the inventory of hair care distributor Standard Distributing Inc., and has formed a new company, Standard Acquisition Inc. Marcy J. Blick, president and chief executive of Standard Acquisition, noted that while the firm acquired the assets of Standard Distributing it did not assume its debts. Dan Medow, former president of Standard Distributing, is now an employee of the new company.

— Andrea Nagel

To access this article, click here to subscribe or to log in.

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus