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For Now, Revlon’s Future Remains in Limbo

The beauty business is still determining the results of an exchange offer that expired Tuesday night, but a bigger and broader restructuring effort may be in order.

Revlon Inc. is still tallying up the final numbers, but preliminary information on its exchange offer on Wednesday morning suggested the deal — and Revlon’s future — remains in limbo. 

The company said $236.5 million of its 5.75 senior noteholders, of a total of almost $343 million, had tendered their notes as of the exchange expiration on Tuesday night. 

“While the company is announcing these preliminary results promptly after the exchange offer’s expiration time, it will determine by Friday, Nov. 13 whether all conditions precedent to the completion of the exchange offer have been fulfilled,” Revlon said in a statement. Revlon added that because Nov. 11, Veteran’s Day, is not a business day under Securities and Exchange Commission rules, the company may still decide to extend the exchange offer by 9 a.m. Thursday.

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The success of the exchange is contingent on a handful of different things, including various consents and liquidity conditions.

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But markets seem to be feeling positive about it. On Monday, trading volume on Revlon exploded — it was more than 18 million shares, versus a normal level in the hundreds of thousands — and the company’s stock price spiked from $6.30 to a high of $13.40, before closing at $8.79. Industry sources said that the movement was due to speculation around the exchange offer’s potential success. 

On Wednesday, Revlon stock closed up more than 22 percent, at $10.77.

If the offer doesn’t go through, experts have said Revlon would need to refinance again because other debt would accelerate to become due Nov. 16, which is what has markets speculating about the possibility of a bankruptcy filing. 

Revlon said in a Nov. 6 SEC filing that “absent an extension or consensual resolution of the accelerated maturity date, the company will continue operations and may pursue reorganization of its capital structure under Chapter 11 of the U.S. Bankruptcy Code.” The Wall Street Journal reported this week that the company had retained restructuring adviser Alvarez & Marsal.

The company on Oct. 30 released unaudited financial results for the quarter ended Sept. 30 that showed continuing and steep declines in the business. Consolidated net sales dipped to $477.1 million in the quarter from $596.8 million in the prior-year period, with an operating loss of $9.7 million. Revlon blamed the decline on the ongoing coronavirus pandemic, saying that COVID-19 caused $119 million of the $119.7 million sales decline.

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