REV HOLDINGS HAS ITS DEBT COVERED
Byline: Evan Clark
NEW YORK — Revlon Inc.’s parent company Rev Holdings, which is controlled by financier Ronald Perelman, said it won’t have to default on its senior secured discount notes due Mar. 15.
As reported, last December Perelman bought back $630 million of the initial $770 million worth of zero-coupon junk bonds issued in February 1997. Rev Holdings also initiated an offer to swap the remaining $140 million for new bonds, which pay 12 percent interest and mature in 2004.
Due to the controversial exchange offer, Standard & Poor’s Corp. downgraded Rev Holdings’ debt and said the bond swap would be “tantamount to default.”
The S&P statement said: “Rev Holdings has indicated that investors who decline to participate in the exchange offer will trigger an event of default, which could result in the notes becoming immediately due and payable.”
Rev Holdings, though, seems to have its bases covered. Of the remaining $140 million of bonds, $80.2 million of them were exchanged under the offer, while approximately another $20 million worth of the bonds were purchased on the open market.
On Feb. 26, Rev Holdings said an affiliate had agreed to “contribute all of the notes due,” which were owned by the undisclosed party, “together with cash sufficient to repay all other outstanding senior secured discount notes due 2001.”
Zero-coupon bonds are issued at a discount to their face value and investors don’t receive any payment until the securities mature. Interest is accumulated over the life of the bond and investors get the par value at maturity.
Though Rev Holdings controls 83 percent of Revlon’s stock, both companies have confirmed that the debt was never an obligation of the operating company.