Revlon’s disclosure statement OK’d following lender settlement

By Sarah Lizee

Olympia, Wash., Feb. 22 – Revlon, Inc. received approval of the disclosure statement for its amended plan following a settlement reached with term loan lenders, according to documents filed with the U.S. Bankruptcy Court for the Southern District of New York.

On Tuesday, the company amended its restructuring support agreement with the original consenting creditor parties, as well as some of its prepetition lenders under its 2016 term loan credit agreement.

Under the amended deal, certain claimholders will now be receiving different treatment.

Each holder of OpCo term loan claims (2016 term loan claims and 2020 term B-3 loan claims against the OpCo debtors) will receive (a) its pro rata share of $56 million in cash, or (b) if a holder makes or is deemed to make the class 4 equity election, their pro rata share of 18% of (i) new common stock issued on the effective date, subject to dilution, and (ii) the equity subscription rights. Holders of no more than $334 million of OpCo term loan claims are permitted to elect to receive cash.

Each holder of 2020 term B-1 loan claims will receive either a principal amount of take-back term loans equal to their allowed 2020 term B-1 loan claim, or an amount of cash equal to the principal amount of take-back term loans that otherwise would have been distributable to the holder.

Each holder of 2020 term B-2 loan claims will receive its pro rata share of 82% of the new common stock issued on the effective date, subject to dilution, and the equity subscription rights.

Under the amended plan, the fully backstopped equity rights offering will be available to holders of OpCo term loan claims and 2020 term B-2 loan claims to raise up to $670 million in cash from the offer and sale of new common stock.

The new common stock issued in the equity rights offering will dilute the new common stock distributed to holders of OpCo term loan claims and 2020 term B-2 loan claims on account of the claims.

Under the amended plan, the parties agreed not to pursue an alternative transaction in the form of a sale of the company’s assets.

As consideration for entering into the backstop commitment agreement, each equity commitment party will receive its backstop commitment percentage of a 12.5% equity commitment premium on the $670 million of the initial funding commitments, which will be payable in the form of new common stock at a price per share calculated at a 30% discount to plan equity value.

The new deal has certain case milestones, including starting solicitation by Feb. 28, receiving confirmation by April 4, and emerging by April 18.

The court set a hearing on confirmation of the plan for April 4.

The company’s DIP financing agreement was amended to reflect the amended timeline.

There have been no changes to the treatment of other claims under the original plan, including BrandCo third-lien guaranty claims, unsecured notes claims, general unsecured claims, qualified pension claims or interests in Revlon.

As before, other secured claims and other priority claims would be unimpaired under the plan.

BrandCo third-lien guaranty claimants will receive nothing. Estimated third-lien claims are $3 million.

Unsecured notes claimants, with $441.4 million of estimated claims, 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.

Talc personal injury claims, estimated at $50 million to $150 million, will be impaired and treated to a pro rata share of 36.1% of the general unsecured claim recovery amount if they vote to accept the plan and nothing if they vote to reject the plan.

Non-qualified pension claims amounting to $50 million to $60 million will be treated to a pro rata share of 19.86% of the general unsecured claim recovery amount if they vote to accept the plan or no recovery if they reject the plan.

Trade claims amounting to $60 million to $80 million will be treated to a pro rata share of 25.27% of the general unsecured claim recovery amount if they vote to accept the plan or no recovery if they reject the plan.

Other general unsecured claims of $42 million to $62 million will be satisfied with a pro rata share of 18.77% of the general unsecured claim recovery if they vote for the plan and nothing if the vote against the plan.

The general unsecured claim recovery amount was detailed as a $44 million settlement allocated to the class under the restructuring support agreement.

Subordinated claimants will receive nothing.

Intercompany claims and interests will either be reinstated or canceled and released, at the option of the debtors.

Interests in holdings claimants will receive no recovery.

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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