Revlon’s $1.43 billion DIP financing approved; objections overruled

By Sarah Lizee

Olympia, Wash., Aug. 1 – Revlon, Inc.’s $1.425 billion debtor-in-possession financing package was approved Monday by the U.S. Bankruptcy Court for the Southern District of New York, according to court documents.

DIP ABL facility

The DIP financing includes a $400 million one-year asset-based facility split into a $270 million ABL revolver rollup and a $130 million term loan rollup.

The ABL facility comes due in one year, with the option to extend the maturity.

Revolving loans bear interest at an adjusted base rate plus 250 basis points, and term loans bear interest at an adjusted base rate plus 475 bps.

MidCap Funding IV Trust is the lead arranger, administrative agent and collateral agent, and Crystal Financial LLC, which does business as SLR Credit Solutions, is the term loan agent.

DIP term facility

The DIP financing package also includes a $1.025 billion term facility from the company’s existing lender base, including Jefferies Finance, LLC as administrative and collateral agent. A $75 million portion of this facility will be used to retire existing foreign debt of the company.

Of the DIP term facility’s amount, $575 million has been committed. The other $450 million is uncommitted and available at the discretion of the lenders for the purpose of refinancing all or part of the DIP ABL facility.

The DIP term facility bears interest at SOFR plus 775 bps and is set to mature in one year.

Committee objection

As previously reported, the official committee of unsecured creditors objected to the financing and expressed several concerns with the Chapter 11 case in general.

Two years prior to its bankruptcy, Revlon changed its capital structure, moving the intellectual property out of its corporate entities and into new special-purpose subsidiaries, known as the BrandCos. The BrandCos then guaranteed new debt collateralized by the IP.

“The move fleeced unsecured creditors at the legacy Revlon companies for the benefit of the new BrandCo lenders, some of whom simply ‘traded up’ their legacy debt position into this new BrandCo debt,” the group said.

The committee claims the maneuver was in violation of prepetition lending arrangements, prompted substantial prepetition litigation, and raises “a host of issues” for the bankruptcy case.

“This is the prism through which the court must look at the debtors’ proposed term DIP loan,” the committee said.

The financing is being provided by some of the BrandCo lenders, who are now the target of estate litigation related to fraudulent transfer and equitable subordination.

The committee said the lenders are motivated to front-run the Chapter 11 process, dismantle the adversary process, and seize the company before its value has been determined.

The group said the proposed DIP financing narrowly constricts time and funding for a reasonable investigation and an orderly presentation of issues to the court.

“If the objective of Chapter 11 is thoughtful, reasoned negotiation towards a fully consensual resolution, this is no way to go about it,” the group said.

The hair color products and cosmetics company is based in New York. The company filed bankruptcy on June 15 under Chapter 11 case number 22-10760.

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