Avon enters into $400 million revolver, replacing $1 billion facility

By Wendy Van Sickle

Columbus, Ohio, June 8 – Avon Products, Inc. entered into a new $400 million five-year senior secured revolving credit facility Friday, according to a company news release.

Borrowings can be used for working capital and other general corporate purposes, according to an 8-K filing with the Securities and Exchange Commission.

The new facility replaces a $1 billion unsecured revolving credit facility that was terminated early from a scheduled expiration date of March 13, 2017. There were no amounts drawn on that revolver at its termination, according to a Form 8-K filed with the U.S. Securities and Exchange Commission.

The initial interest rate for the new revolver is Libor plus 250 bps. The rate will vary from Libor plus 200 bps to Libor plus 300 bps, depending on leverage, according to the SEC filing.

The initial commitment fee is 50 bps. The commitment fee will then vary from 37.5 bps to 50 bps, also depending on leverage.

Avon said other features of the new facility include the following:

• The same financial maintenance covenants as the previous facility, but set at less restrictive levels; and

• A guarantee on a limited-recourse basis by the company and in full by certain domestic subsidiaries, secured by certain assets, including substantially all U.S. assets and capital stock of certain subsidiaries.

“This new revolver provides us with a five-year maturity and enhanced flexibility under our financial covenants. The new facility is an important part of Avon’s ongoing plan to proactively manage our balance sheet and liquidity needs,” said James S. Scully, executive vice president and chief financial officer of Avon Products, said in the news release.

Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Inc., Goldman Sachs Bank USA and HSBC Securities (USA) Inc. are the joint lead arrangers and joint bookrunners in the deal. Citibank, NA is the administrative and collateral agent. Bank of America, NA is the syndication agent, and Goldman Sachs Bank USA and HSBC Bank USA, NA are the co-documentation agents.

The beauty products company is based in New York.

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