Avon Products amends interest coverage ratio covenant under revolver

By Marisa Wong

Madison, Wis., Dec. 31 - Avon Products, Inc. amended its revolving credit and competitive advance facility agreement dated Nov. 2, 2010 to alter the calculation of the interest coverage ratio, according to an 8-K filed Friday with the Securities and Exchange Commission.

The amendment, completed on Dec. 21, allows the company to add back to its consolidated net income

• Extraordinary and other non-cash losses and expenses;

• One-time fees, cash charges and other cash expenses, premiums or penalties incurred in connection with any asset sale, equity issuance or incurrence or repayment of debt or refinancing or amendment of any debt instrument; and

• Cash charges and other cash expenses, premiums or penalties incurred in connection with any restructuring or relating to any legal or regulatory action, settlement, judgment or ruling in an amount not exceeding $400 million for the period from Oct. 1 until the termination of commitments under the credit agreement.

In addition, the company is in the process of seeking an amendment to its note purchase agreement dated Nov. 23, 2010 to, among other things, modify financial definitions relating to the interest coverage ratio covenant.

Citibank, NA is the administrative agent for the credit agreement.

Avon is a New York-based manufacturer and distributor of beauty, household and personal care products.

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