While everything at Revlon Inc. remains up for grabs, the company is now focusing on selling brands like Almay and American Crew in order to invest back into the business and pay down debt, according to a source with direct knowledge of the deal process.
“Where things are focused right now is on selling more significant portfolio and regional brands as a way to drive investment back into the core strategies,” the source said.
Revlon is said to be focused on selling brands in the portfolio segment, which includes Almay, American Crew, CND and Mitchum. The brands are said to be available as a group, or individually, and there is said to be active buyer interest.
Revlon confirmed the shift in the process. A spokesman for the company said: “Revlon is working with Goldman Sachs reviewing strategic alternatives and that process is ongoing and progressing well. As we continue to consider all of the options, one path that could drive the greatest value for our stakeholders is pursuing transactions involving the portfolio and regional brands. We see these brands as being highly valuable with strong consumer followings in their markets and sectors and significant growth potential under new ownership. In 2020, we will continue our focus on our core strategies, including driving growth behind our iconic Revlon and Elizabeth Arden brands. We would also continue to drive investment into our current strategic growth areas, including China [and] e-commerce.”
The business division that contains those smaller businesses, called the portfolio segment, did $118.2 million in sales for the third quarter, down 14.6 percent year-over-year. The decline was due to lower sales at Almay, “increased promotionality” and lower sales for CND and Pure Ice nail polish.
Revlon has been struggling for years, and ended the third quarter with an 8.9 percent sales decline, and $596.8 million in net sales. Part of the problem has been the mass makeup landscape, the company has said.
But Revlon is also contending with looming debt maturities, which sources have said are a key reason the company is exploring strategic alternatives. Chief executive officer Debbie Perelman told Wall Street analysts in November that the company was working with lenders to refinance the loans.
Revlon has $167 million in available liquidity as of the most recent quarter, but a much higher amount in looming maturities.
According to SEC filings, as of Sept. 30, the company had $79.5 million outstanding on an asset-based term loan, $345 million on a revolving credit facility and $498 million in 5.75 percent senior notes, all due in 2021. The company also took out another $200 million term loan earlier in 2019, which is secured by American Crew.
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