Moody’s downgrades Revlon notes, loan

Moody’s Investors Service said it downgraded Revlon Consumer Products Corp.’s unsecured notes to C from Ca and its senior secured term loan rating to Ca from Caa2.

At the same time, Moody’s affirmed Revlon’s corporate family rating at Caa3 and its probability of default rating at Caa3-PD. The speculative grade liquidity rating remains unchanged at SGL-4. The rating outlook is negative.

These actions follow the proposed refinancing of Revlon’s 2016 term loan started on April 14, the agency said.

“Specifically, Revlon is soliciting the support of its existing lenders to refinance the 2016 term loan maturing September 2023 into a new term loan that will mature in June 2025,” Moody’s said in a press release.

“Revlon will contribute certain intellectual property (“IP”) related to Elizabeth Arden, American Crew and certain owned portfolio brands and owned fragrance brands (collectively, the “BrandCo Collateral”) into a restricted subsidiary that will be used as collateral for the new term loans,” the agency said.

The 2016 term loan’s downgrade to Ca from Caa2 reflects the removal of the BrandCo collateral and the dilution of the security interest in the remaining collateral will weaken recovery prospects, the agency said.

“The downgrade of the unsecured notes to C from Ca reflects their weaker recovery prospects given the additional amount of secured debt in Revlon’s proposed capital structure,” Moody’s said.

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