S&P DOWNGRADES REV
NEW YORK — Despite a chorus of criticisms, bond holders are expected to accept the controversial exchange offer from Revlon’s parent, Rev Holdings.
The exchange offer prompted Standard & Poor’s Corp. on Tuesday to downgrade the debt of Rev Holdings to Double-C from Triple-C-minus while saying the bond swap would be “tantamount to default.”
Bond analysts said the exchange offer continues to have no impact on Revlon Consumer Products, the operating company. S&P affirmed the ratings and maintained its negative outlook on Revlon Consumer Products.
S&P had placed the holding company’s debt under review after news surfaced in December that Ronald Perelman had acquired $630 million worth of zero-coupon junk bonds and initiated an offer to swap the remaining $140 million in bonds for new bonds that pay 12 percent interest. The zero coupon bonds, which are due to mature on March 15, are secured by 20 million shares of Revlon Inc., Perelman’s stake in the company. Laurie Harris, analyst at Standard & Poor’s, said the downgrade reflects “the coercive nature of the exchange” given the company’s claiming to have insufficient funds to pay the maturity while at the same time saying failure to accept the offer would trigger a default. In a default, holders would get their proportional shares in Revlon Inc., which is trading at depressed prices.