Revlon, the troubled 90-year-old New York-based beauty company that owns the namesake Revlon, Elizabeth Arden and Almay brands, looks to be close to reaching a deal that would see creditors take over the cosmetics company that Ron Perelman has helmed for decades.
According to legal filings, Revlon has entered into a Chapter 11 restructuring support agreement with two creditor groups that would involve ownership stakes being handed to secured lenders, while existing shareholders, including Perelman, who controlled around 85 percent of the company as of earlier this year, would be left with nothing. The two creditor groups are the Consenting BrandCo Lenders, which includes Ares Management and Oak Hill Advisors, and the Official Committee of Unsecured Creditors, appointed in the Chapter 11 cases.
Any agreement would require the approval of a U.S. bankruptcy court and for Revlon to exit the Chapter 11 bankruptcy process by no later than April 17, while the option of a sale is also still on the table. A hearing will be held on Thursday.
Revlon has been struggling with a hefty pile of debt — about $3.7 billion — that it spent much of 2020 renegotiating, which enabled it to avoid a more formal restructuring process back then. But supply chain issues, soaring inflation and increased competition from the likes of The Estée Lauder Cos., Coty Inc. and a plethora of digital start-ups have only exacerbated the situation and these factors, combined with loans coming up for renewal, forced it into bankruptcy earlier this year. Revlon also previously tried to sell several of its brands over the years, cycling through different bankers.
“Consumer demand for our products remains strong — people love our brands, and we continue to have a healthy market position,” Debra Perelman, Revlon’s president and chief executive officer, said at the time. “But our challenging capital structure has limited our ability to navigate macroeconomic issues in order to meet this demand. By addressing these complex legacy debt constraints, we expect to be able to simplify our capital structure and significantly reduce our debt, enabling us to unlock the full potential of our globally recognized brands.”
Her father, Ron Perelman, has been the majority owner of Revlon since the mid-’80s, gaining control via a hostile takeover through his company MacAndrews & Forbes. He took Revlon to new heights in the ’80s and ’90s, when he used the brand to catapult himself into the worlds of society, fashion and Hollywood by tapping such faces as Cindy Crawford, Christy Turlington, Jerry Hall and more.
But in 2020 he revealed that he’d been selling off assets — from companies to fine art — and at the beginning of this year, he offloaded his opulent Lily Pond Lane mansion in East Hampton, New York, for $84 million. This was down from the original listing price of $115 million.