Revlon sweetens, extends offer of 12¾% preferreds for class A stock

New York, Sept. 24 - Revlon, Inc. said it has amended its exchange offer in which each share of its class A common stock may be exchanged on a one-for-one basis for a share of a newly issued series of 12¾% preferred stock and extended the expiration.

The offer will now end at 11:59 p.m. ET on Oct. 7 instead of 5 p.m. ET on Sept. 24.

Under the revised terms:

• Each share of series A preferred stock to be issued in exchange for a share of class A common stock will have a liquidation preference of $5.21, rather than $3.71, as previously proposed;

• Because the liquidation preference has been increased by $1.50, holders of the preferreds will no longer have the right to receive a special dividend of $1.50 if Revlon does not engage in a change of control transaction within two years of consummation of the exchange offer;

• Holders of series A preferreds will receive cash payments of $7.87 per share (instead of $7.10 per share, as previously proposed) over the four-year term of the preferred stock, through the payment of the $5.21 per share liquidation preference at maturity (instead of $3.71 per share, as previously proposed) and 12.75% annual dividends payable quarterly in cash, equal to approximately $0.17 per share quarterly (instead of dividends of approximately $0.12 per share quarterly and a $1.50 per share special dividend at the end of two years, as previously proposed). These per share calculations assume that Revlon does not engage in one of certain specified change of control transactions, which may lead to a higher payment;

• If Revlon engages in one of certain specified change of control transactions within three years of consummation of the exchange, holders of the preferreds will have the right to receive a special dividend, capped at an amount that would provide aggregate cash payments of up to $12.00 per share, including the liquidation preference and any dividends. As previously proposed, holders were only entitled to such payment if Revlon engaged in one of certain specified change of control transactions within two years of consummation of the exchange, although holders of the preferreds could have effectively extended this right for one year (and during such third year their right to receive such special dividend would have been capped at $12.50 per share) by converting their series A preferreds into series B preferred stock and giving up the $1.50 special dividend to which they would have been entitled after two years;

• Series A preferred stock will no longer be convertible into series B preferred stock because holders of series A preferred stock will now have the opportunity to receive a special dividend if Revlon engages in one of certain specified change of control transactions within three years of consummation of the Exchange Offer;

• Upon consummation of the exchange, MacAndrews & Forbes will contribute to Revlon $5.21 of the aggregate outstanding principal amount of the senior subordinated term loan between MacAndrews & Forbes and Revlon Consumer Products Corp., Revlon's wholly owned operating subsidiary, for each share of class A common stock tendered for exchange, up to a maximum contribution of $105.43 million of the loan. As previously proposed, MacAndrews & Forbes would have contributed $3.71 of the aggregate principal amount of such loan, up to a maximum contribution of $75 million;

• The maturity date of that portion of the senior subordinated term loan that will be contributed will be extended from Aug. 1, 2010 to the fourth anniversary of consummation of the exchange, and the interest rate will be changed to 12.75% from 11%, while the maturity date of the portion of the senior subordinated term loan that will remain owed to MacAndrews & Forbes will be extended from Aug. 1, 2010 to the fifth anniversary of consummation and the interest rate will be changed to 12% from 11%. As previously proposed, the maturity date of the entire senior subordinated term loan would have been extended to the fourth anniversary of consummation of the exchange and the interest rate would have been changed to 12.75%;

• The minimum condition has been amended to at least 7,500,000 shares of class A common stock not beneficially owned by MacAndrews & Forbes and its affiliates, or 37% of the class A stock not beneficially owned by MacAndrews & Forbes and its affiliates. The minimum condition originally provided that at least 10,117,669 shares be tendered.

The exchange was originally announced on Aug. 10 with an expiration of Sept. 10, subsequently extended twice to Sept. 24 at a previous announcement on Sept. 11.

As of Sept. 10 holders had tendered 8,436,516 shares of class A stock.

The company said that counsel for parties in some Delaware shareholder lawsuits filed against Revlon, its directors and MacAndrews & Forbes in connection with an initial proposal by MacAndrews & Forbes that led to the exchange offer reached an agreement in principle to settle all claims raised by the suits.

The completion of the offer was originally subject to the receipt of tenders from holders of a least a majority of the class A common stock not beneficially owned by MacAndrews & Forbes and its affiliates. MacAndrews & Forbes will not be tendering any shares.

MacAndrews & Forbes, which is wholly owned by Ronald O. Perelman, beneficially owns about 58% of Revlon's outstanding class A common stock, 100% of its class B common stock and approximately 61% of Revlon's combined outstanding shares of class A and class B common stock, which together represent about 75% of the combined voting power of such shares.

D.F. King & Co., Inc. (800 949-2583) is the information agent.

Revlon makes cosmetics and other personal care products and is based in New York.

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