Revlon details restructuring support agreement to back plan

Chicago, Dec. 19 – Revlon, Inc. entered into a restructuring support agreement on Monday with certain parties, according to an 8-K filed with the Securities and Exchange Commission.

The plan was expected to be in place Nov. 15, but the milestone deadline was extended twice and the company reached an agreement by the third deadline on Monday after a brief weekend extension from Friday.

According to the agreement, Revlon is looking at either an equitization restructuring or alternative sale transaction that would repay in full and in cash all term B-2 loan claims and term B-2 loan claims from a 2020 credit agreement.

The restructuring agreement, pursuant to an equitization restructuring, provides for the following treatment of claims and interests:

• FILO ABL claims would be paid in full in cash;

• OpCo term loan claimants would receive a pro rata share of 50% of the new common stock and equity subscription rights with the distribution of the new common stock subject to dilution in connection with an equity offering;

• BrandCo first-lien guaranty claimants would receive either cash or a principal amount of first-lien take-back term loans equal to the holder’s first-lien guaranty claim minus the value of the distributions received on their OpCo term loan claim;

• BrandCo second-lien guaranty claimants will receive either their pro rata share of either cash or a principal amount of first-lien take-back term loans after the distribution to first-lien guaranty claimants and their pro rata share of half of the common stock and equity subscription right;

• BrandCo third-lien guaranty claimants will receive nothing;

• Unsecured notes claimants will receive their pro rata share of new warrants if the class votes to accept the plan or nothing if the class rejects the plan, but noteholders who vote to accept the plan if the class rejects the plan may be able to receive half of their pro rata share of new warrants if the court allows for such a distribution;

• General unsecured claimants will receive their pro rata share of a $44 million settlement allocated to the class and any retained preference action allocated to such a class plus, for the class of other general unsecured claims, the settlement top up amount if the class votes to accept the plan or nothing if the class rejects the plan (all of this subject to certain procedures for talc personal injury claims);

• Qualified pension plans will be reinstated; and

• Interests in Revlon will be extinguished.

While the plan is based on an equitization restructuring, Revlon will continue the marketing process to determine whether an acceptable alternative transaction is available pursuant to an asset sale. An asset sale plan would provide the equivalent or greater recoveries for each class of claims.

The consenting creditor parties have agreed to support the restructuring transactions as set out in the restructuring support agreement. The consenting creditor parties include certain of the lenders from the company’s 2020 BrandCo credit agreement and the official committee of unsecured creditors.

Equity rights offering

Revlon will be conducting an equity rights offering for up to $650 million in cash for new common stock, offered to OpCo term loan claimants and BrandCo second-lien guaranty claimants.

The equity rights offering will be fully backstopped by certain equity commitment parties and a portion of the offering will be reserved for those parties.

Management, employees

Revlon has also agreed, upon emergence, to assume or replace the employment agreement with the company’s chief executive officer, the company’s severance plan and the company’s cash bonus programs for 2023.

Subject to court approval, the company will adopt an equity management incentive program to be allocated following emergence.

Next steps

Revlon is expected to file its plan and disclosure statement by Dec. 22, an extension from originally Dec. 14, but worked out with its debtor-in-possession facility lenders.

The bankruptcy court, as a milestone, should approve the disclosure statement by Feb. 6.

The company will be seeking approval of the backstop commitment agreement by Feb. 14.

Voting solicitation should start by Feb. 20.

Plan confirmation should be on track by April 3.

The company is planning an April 17 effective date.

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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