Revlon Inc. majority stockholder Ronald Perelman offered to buy the 20 million shares of common stock he doesn’t already own for $75 million as part of a deal that would pay the cosmetics company’s shareholders an annual cash dividend of 12.5 percent for four years.
Perelman’s holding company, MacAndrews & Forbes, said it doesn’t plan to sell its commanding equity stake in Revlon, but other shareholders would get a $1 payout if the firm is not sold in two years. Perelman is chairman of Revlon.
The beauty firm’s independent directors are evaluating the plan, under which the 20 million shares not owned by Perelman would be converted to preferred stock and redeemed for about $3.74 each in four years. The dividend on those preferred shares would be paid quarterly. Should the company be sold within two years, preferred shareholders would be entitled to participate with the common stock to a limited but unspecified extent.
Shares of Revlon rose 16 cents, or 4.1 percent, to $4.09 Monday, after jumping 37.9 percent to $3.93 in unusually heavy trading Friday. Over the last year, the stock has traded as high as $14.85 and as low as $2.30. On Sept. 16, it effected a 1-for-10 reverse stock split that cut the number of Class A and Class B shares by 90 percent but allowed them to return to compliance with the minimum price standards of the New York Stock Exchange.
Under terms of the proposed stock deal, MacAndrews & Forbes also would forgive $75 million of its $107 million term loan to Revlon, while extending the loan’s maturity to 2013 and boosting its interest rate to 12.5 percent.
MacAndrews & Forbes owns 31.4 million shares of Revlon’s Class A common stock — about 61.1 percent of those outstanding — and wields about 75 percent of the voting power at the company due to other stock holdings.
Revlon last year reported a profit of $57.9 million, including a $45.2 million gain from the sale of a discontinued operation, on revenues of $1.35 billion. The company posted a 2007 loss of $16.1 million and sales of $1.37 billion.