Avon intends to sell $400 million six-year secured notes

By Paul Deckelman

New York, Aug. 1 – Avon Products, Inc. announced on Monday that a company subsidiary will sell $400 million of senior secured notes due 2022 as part of the financing for Avon’s separately announced tender offer for some of its existing bonds.

The Rule 144A and Regulation S notes will be issued by the company’s wholly owned Avon International Operations, Inc. subsidiary.

There was no immediate information available in the market Monday on the timing of the offering or official confirmation of the underwriting banks – although Bank of America’s Merrill Lynch, Pierce, Fenner & Smith Inc. subsidiary, Citigroup Global Markets Inc. and Goldman Sachs & Co. will be the dealer managers on the related tender offer.

Avon is tendering for up to $650 million total principal amount of its $1.35 billion of existing 2018, 2019 and 2020 senior notes (in order of acceptance priority, its $250 million of 5¾% notes due 2018, its $250 million of 4.2% notes due 2018, its $350 million of 6½% notes due 2019 and its $500 million of 4.6% notes due 2020). The tender offer expires on Aug. 26, with an early tender deadline of 5 p.m. ET on Aug. 12.

Avon plans to fund the tender offer with cash on hand and proceeds from the new secured bond deal.

The new secured notes will be guaranteed by Avon Products and each of its current and future wholly owned domestic subsidiaries that is a guarantor under Avon International Operations’ first-lien revolving credit facility. The notes and guarantees will be secured equally and ratably by the assets of Avon International Operations and its subsidiaries that secure the revolving credit facility.

New York-based Avon manufactures and markets beauty care products such as cosmetics and fragrances and related fashion and home products including jewelry, watches, apparel, footwear, accessories, gift and decorative products, housewares, entertainment and leisure products, children’s products and nutritional products.

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