Revlon files commitment agreements for $850 million in exit financing

By Sarah Lizee

Olympia, Wash., Jan. 18 – Revlon, Inc. is seeking authorization to enter into commitment agreements for $850 million of its planned $1.1 billion in exit financing, according to documents filed with the U.S. Bankruptcy Court for the Southern District of New York.

As background, Revlon entered into a restructuring support agreement on Dec. 19 and filed a Chapter 11 plan on Dec. 23. The restructuring is supported by an informal group of BrandCo lenders and the official committee of unsecured creditors.

The recently filed commitment letters are for $650 million in equity financing and $200 million in debt financing through an incremental new money facility. Some of the debtors’ BrandCo lenders agreed to fully backstop each transaction.

Together, these commitments will provide the debtors and stakeholders with certainty as to the funding of $850 million of the $1.1 billion of needed capital.

The debtors have also started a process to raise $500 million of asset-based loan financing, and as part of that process, are seeking alternative debt proposals to see if more favorable terms are available in the market.

Commitment premiums

The equity parties will receive as consideration for backstopping the equity rights offering a premium of 12.5% of the $650 million amount, payable in new common stock on the effective date at a price consistent with the price that non-backstop parties have been offered.

They will also receive the right to subscribe to 30% of the $650 million amount, also at a price consistent with the price that non-backstop parties have been offered.

The price that non-backstop parties have been offered to participate in the equity rights offering is at a 30% discount to plan equity value.

The debt commitment parties will receive as consideration for backstopping the new money facility a 3% premium on their $200 million backstop commitment payable in kind in loans under the facility.

Also, if the debtors aren’t able to raise financing from third parties and the debt commitment parties are required to fund the facility, they will receive, aside from the 3% premium, a total 8% funding discount (substantively similar to an original issue discount) on the facility’s amount, payable in kind in loans under the facility.

There is a 12.5% termination premium to equity commitment parties and a 3% termination fee to debt commitment parties.

There are also expense reimbursements under the agreements.

The hair color products and cosmetics company is based in New York. The company filed bankruptcy on June 15, 2022 under Chapter 11 case number 22-10760.

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