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Daniel Acker | Bloomberg | Getty Photographs
Cosmetics large Revlon filed for Chapter 11 chapter safety on Wednesday night because it grappled with a cumbersome debt load and a snarled provide chain.
The corporate mentioned it expects to obtain $575 million in debtor-in-possession financing from its present lender base, which can assist to assist its day-to-day operations.
“Right this moment’s submitting will permit Revlon to supply our customers the long-lasting merchandise we have now delivered for many years, whereas offering a clearer path for our future progress,” Revlon President and Chief Govt Officer Debra Perelman mentioned in a press launch issued Thursday morning.
“Our difficult capital construction has restricted our capability to navigate macro-economic points in an effort to meet this demand,” Perelman added.
Revlon’s chapter submitting mentioned that the corporate is presently unable to well timed fill nearly one-third of client demand for its merchandise, because of an incapacity to supply a “enough and common provide of uncooked supplies.” Delivery parts from China to the US takes Revlon eight to 12 weeks and prices four-times 2019 costs, it mentioned.
Revlon is the primary main consumer-facing enterprise to file for chapter safety in what has been a years-long pause on misery within the retail sector. Greater than three dozen retailers filed for chapter in 2020, marking an 11-year excessive, which consultants say was an intensive and pandemic-driven pull-forward of restructuring exercise.
By means of Could 31, S&P International Market Intelligence tracked 143 bankruptcies, throughout all industries, up to now this yr, which is the slowest tempo since at the least 2010. S&P solely tracked three retail chapter filings over the identical interval, the bottom rely in at the least 12 years, it mentioned.
Now, nonetheless, as inflation rages, rates of interest rise and customers start to drag again spending on discretionary gadgets, consultants predict extra retail corporations might be pressured to restructure. Notably as many of those companies grapple with ongoing provide chain challenges which have left them with the fallacious inventories.
The nail polish and lipstick maker, which is managed by billionaire Ron Perelman’s MacAndrews & Forbes, listed belongings and liabilities between $1 billion and $10 billion, in keeping with a submitting with the U.S. Chapter Court docket for the Southern District of New York.
Revlon had long-term debt of $3.31 billion as of March 31, a securities submitting reveals. The corporate’s market cap was practically $123 million as of the shut of buying and selling Wednesday. Buying and selling in Revlon shares was halted in Thursday’s premarket session.
In late 2020, as stuck-at-home customers dramatically curtailed their spending on magnificence gadgets, Revlon narrowly averted chapter when sufficient bondholders took half in its debt restructuring program. The corporate had warned in early November of that yr that it could be compelled to file for Chapter 11 safety.
Its gross sales of about $1.9 billion in 2020 had been down 21% from 2019 ranges. Although the enterprise rebounded in 2021, Revlon’s income remains to be beneath pre-pandemic ranges.
Begin-ups together with Glossier, Kylie Jenner’s Kylie Cosmetics and Rihanna’s Fenty Magnificence have additionally challenged Revlon because it vies for youthful customers’ {dollars}.
Perelman’s MacAndrews & Forbes acquired Revlon in a hostile takeover for about $1.8 billion in 1985. It went public 11 years later.
The enterprise grew over time by way of acquisitions, together with of Coty’s Cutex enterprise and Elizabeth Arden. Along with its namesake make-up banner, its portfolio additionally contains Almay, American Crew and Britney Spears Fragrances.
PJT Companions is appearing as monetary advisor to Revlon, and Alvarez & Marsal is appearing as restructuring advisor.
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