Elizabeth Arden debt pops on Revlon merger news; Cliffs steady; oil price rally boosts energy sector

By Stephanie N. Rotondo

Seattle, June 17 – A trader said Elizabeth Arden Inc. was the day’s “most notable” name on Friday, after Revlon announced it was buying the beauty products company for $419.3 million in cash.

Not only were the company’s bonds actively traded during the session, but the debt jumped well over 20 points on the day.

“That was a home run,” he said, characterizing Elizabeth Arden as a “distressed consumer products company.”

Meanwhile, Cliffs Natural Resources Inc.’s 3.95% notes due 2018 continued to be active following Thursday’s reports that the company planned to sell up to $300 million in new equity to take out the debt.

However, a trader said the paper was “still around the 96 level,” where it had traded up to on Thursday.

Among other commodity names, California Resources Corp.’s 8% second-lien notes due 2022 were “back up a bunch” as domestic crude oil prices rallied.

A trader pegged the issue in a 68½ to 69 context.

At another shop, Chesapeake Energy Corp.’s 6 5/8% notes due 2020 were seen up nearly 3 points at 73¼.

As for oil, it was up 4.15% on the day, closing at $48.13 a barrel. The gains came as Brexit fears eased. The market even shrugged off new data from Baker Hughes that showed nine more active U.S. drill rigs were added last week.

In the steel space, a trader said AK Steel Holdings Corp.’s 7 5/8% notes due 2020 were “up a couple points,” trading with a 91 handle.

“I didn’t see anything new there” to cause the move, he noted.

Another market source called the issue up a deuce at 90 bid.

Up goes Elizabeth Arden

Elizabeth Arden’s 7 3/8% notes due 2021 saw a sizable move on Friday after sector peer Revlon said it was buying the company for just over $419 million in cash, or $14 per share.

The price per share equaled a 50% premium over Thursday’s closing price.

A trader said the bonds popped to 102, up from previous levels in the high-70s.

Another trader noted that the paper has a 101 change-of-control put feature.

Including debt, the deal is valued at about $870 million. Revlon expects the merger to results in annual cost savings of about $140 million.

The deal is expected to close this year.

For its part, Elizabeth Arden, which is in Miramar, Fla., has been attempting to turn its business around. In its most recent quarter, it posted a loss of $28.4 million on revenue of $191.9 million.

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