S&P: Revlon on positive watch

Standard & Poor's said it placed its rating on Revlon Consumer Products Corp. on CreditWatch with positive implications, following the company's announcement that it had reached an agreement with MacAndrews & Forbes and Fidelity Investments, two of its largest creditors, to reduce $930 million of its $1.9 billion in total debt.

This reduction will be primarily through a debt-for-equity exchange. Of the total $930 million, about $780 million will be exchanged by March 31, 2004, and the remainder will be completed by March 2006. Public debtholders have also been given the option to exchange their holdings for equity.

Currently, Revlon Consumer Products' corporate credit and senior secured debt is rated CCC+, the senior secured bank loan is rated B-, and the senior unsecured and senior subordinated debt is rated CCC-.

After the planned transaction, S&P said it believes the company's credit profile will be stronger and that the corporate credit rating will rise into the B category. S&P said it views the privately negotiated agreements with Fidelity and MacAndrews & Forbes as completing the bulk of Revlon's capital restructuring.

S&P said the planned transaction will stabilize the company's credit profile, significantly reducing leverage and improving liquidity. The exchange offer for various publicly held debt issues would further improve the credit profile. The value of these offers either exceeds or approaches par based on Revlon's current stock price. These factors are reflected in Revlon's bonds, which are no longer trading at distressed levels.

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