Revlon amends loan, allowing for investment and modifying financial covenants

By Sara Rosenberg

New York, Feb. 5 - Revlon Inc. amended its credit facility to allow for an investment by MacAndrews & Forbes, to ease covenants and increase the interest rate.

As far as covenants are concerned, the amendment waives EBITDA and certain other financial covenants for the fourth quarter of 2002, eliminates those covenants for the first three quarters of 2003, waives fourth quarter 2003 financial covenants through Jan. 31, 2004 and provides a minimum liquidity covenant for 2003.

The interest rate rises 50 basis points.

Citibank is the documentation agent, J.P. Morgan Securities Inc. is the arranger and JPMorgan Chase Bank is the administrative agent on the bank credit agreement.

MacAndrews & Forbes will provide Revlon with up to $150 million in cash through the combination of an equity rights offering and debt financing.

Specifically, the investment provides a $100 million senior unsecured multiple-draw term loan at an interest rate of 12% per annum, with no interest payable until final maturity on Dec. 1, 2005, a commitment to participate on a pro-rata basis with other Revlon common stockholders in a $50 million equity rights offering and agreeing to back the rights offering by purchasing all of the shares offered but not purchased by other stockholders and a $50 million advance, if needed, prior to completing the rights offering, through the purchase of non-convertible, non-voting preferred stock that does not pay a dividend and which would be redeemed upon consummation of the rights offering.

In addition, MacAndrews & Forbes has agreed to continue its commitment to provide Revlon with additional liquidity of up to $40 million through Dec. 31, 2003 and has increased the commitment to up to $65 million through Dec. 31, 2004, in the form of a senior unsecured line of credit at an interest rate 25 basis points lower than the rate under the company's credit facility.

"I am pleased with the recommendation of the special committee and the support of both MacAndrews & Forbes and our bank group during this very important period for the company. This investment will be used to help fund our strategic plan," said Jack Stahl, president and chief executive officer, in a news release.

Revlon is a New York manufacturer, marketer and seller of cosmetics and skin care, fragrances and personal care products.

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