Revlon says exchange offers for 8 1/8%, 9% and 8 5/8% notes successful

New York, March 22 - Revlon Inc. (Ca/CCC-) announced the successful expiration of its previously announced offers to exchange new class A common stock or cash for its 8 1/8% senior notes due 2006, its 9% senior notes due 2006 and its 8 5/8% senior subordinated notes due 2007.

The exchange offers expired as scheduled at 5 p.m. ET on March 19, without extension. As of that time, a total of $630 million principal amount of the notes were tendered for the class A common stock, representing $190 million of notes tendered by independent bondholders in addition to the notes previously committed by MacAndrews & Forbes and Fidelity Management & Research Co. as part of their support agreements related to the exchange offers.

As of the close of business on March 19, according to the report of the exchange agent for the offer, $133 million principal amount of the 8 1/8% notes, $175 million principal amount of the 9% notes and $322 million principal amount of the 8 5/8% notes had been validly tendered in the exchange offers by all of the holders, including MacAndrews & Forbes and Fidelity. Revlon has notified the exchange agent that it has accepted all notes that validly tendered in the exchange offers for class A common stock.

Revlon expects to consummate the exchange offers by March 25, at which time the tendered notes will be exchanged for a total of 223 million shares of Revlon's class A common stock, which includes shares issued in exchange for accrued interest.

Also, at the closing and as part of the company's overall debt reduction plan, MacAndrews & Forbes will exchange $173 million of existing loans for 67 million shares of Revlon's class A common stock and will exchange or convert all of the company's outstanding series A preferred stock and series B convertible preferred stock for an a total of about 9 million shares of Revlon's class A common stock.

The additional MacAndrews & Forbes transactions, together with the exchange offer for the notes, will bring the total debt reduction to more than $800 million, exceeding the $780 million of targeted minimum debt reduction at this stage of the company's debt reduction plan.

Following the consummation of these transactions, the company will have outstanding 338 million shares of class A common stock and 31.25 million shares of class B common stock. As a result of these transactions, MacAndrews & Forbes will beneficially hold about 60% of Revlon's common stock (representing 77% of the company's voting power); funds and accounts managed by Fidelity will beneficially hold about 21% of the company's common stock (representing 12% of the company's voting power); and other stockholders will beneficially hold 19% of the company's common stock (representing 11% of the company's voting power).

As previously announced, Revlon, a New York-based cosmetics maker, said on Feb. 23 that it had begun offers to exchange class A common stock or cash for its 8 1/8% notes, 9% notes and 8 5/8% notes, on terms previously outlined when the company unveiled a sweeping program of planned debt-reduction efforts.

Revlon said that the exchange offers would expire at 5 p.m. ET on March 19, subject to possible extension.

It said there was no limit on the amount of notes that may be exchanged for class A common stock.

Revlon said that each of the exchange offers was independent of the other exchange offers. None of the exchange offers would be conditioned upon the exchange of a minimum principal amount of 8 1/8% notes, 9% notes or 8 5/8% notes being tendered for exchange, but would otherwise be subject to certain customary conditions, including shareholder approval of the issuer of the additional shares to be exchanged for the notes.

On Feb. 12, Revlon had announced that it planned to eliminate some $930 million of debt - roughly half of the company's debt load - by March, 2006, including at least $780 million of debt to be exchanged for under the current offers.

Revlon's wholly owned Revlon Consumer Products Corp. subsidiary had outstanding at the time $250 million of the 8 1/8% notes issued in January 1998, $250 million of the 9% notes issued in November 1998 and $650 million of the 8 5/8% notes issued in January 1998, for a total principal amount of 1.15 billion. Some of the notes were in the hands of Revlon Inc.'s 83% owner MacAndrews & Forbes, the investment vehicle for Revlon chairman Ronald O. Perelman. Others were in the hands of Fidelity Management & Research Co. - an institutional investor taking part in the exchange offer - while the remainder was in the hands of independent bondholders.

Revlon said that as the first step, it reached agreements with MacAndrews & Forbes and with Fidelity, under which they agreed to tender to Revlon a total of $630 million of debt, consisting of $440 million of the publicly traded bonds - $285 million held by MacAndrews & Forbes and $155 million held by Fidelity - and about $190 million of other debt - loans, non-public bonds and other debt held by MacAndrews & Forbes.

Revlon agreed to exchange its class A common shares for their public bond holdings, offering 400 shares per $1,000 principal amount of the 8 1/8% and 9% notes and 300 shares per $1,000 principal amount of the 8 5/8% notes.

The company said it was seeking to buy back at least $150 million of the bonds held by the other bondholders, offering them either class A common shares on the same terms granted MacAndrews & Forbes and Fidelity, or cash for their bonds.

Revlon said that should those other bondholders choose the cash option, they would receive $830 per $1,000 principal amount of 8 1/8% notes tendered for exchange and accepted by the company for cash payment; $800 per $1,000 principal amount of 9% notes tendered and accepted; and $630 per $1,000 principal amount of the 8 5/8% notes tendered and accepted. The company said that whether they opted for the debt-for-stock swap or the cash offer, the other bondholders would have the option of receiving their accrued interest in cash or in additional common shares.

Revlon said that it would accept for cash payment up to a maximum of $150 million principal amount of the bonds held by the other bondholders, but added that the amount it would ultimately accept under this cash payment option would be lowered by the amount of bonds tendered for exchange into equity. Revlon indicated, for instance, that should the other holders tender $150 million of bonds for cash payment but also tender $100 million in exchange for stock, Revlon would accept no more than $50 million of the bonds tendered for cash, allocating them on a pro-rata basis; holders who tendered for cash would be given the option of switching everything over the pro-rata amount to the debt-for-equity option or withdrawing those tenders.

Revlon said that in the event the exchange offers to the other bondholders were to be subscribed above the $150 million level, it planned to accept their tenders, and lower by a corresponding amount the additional $150 million minimum amount of funds that it envisioned raising from a $50 million rights offering projected to take place by the end of this year and a $100 million equity offering projected to take place sometime before March 2006. The company further said that in the event that the oversubscription amount was $150 million or more, there would be no rights offering or equity offering.

On the other hand, Revlon said that in the event that the other bondholders failed to tender $150 million principal amount in their portion of the exchange offer, MacAndrews & Forbes would "backstop" that portion of the offering, making up the difference between $150 million and the amount of bonds actually tendered, by subscribing to an additional number of class A common shares at a price of $2.50 per share, with proceeds going to pay down Revlon Consumer Products debt. In that event, other shareholders of record would be given the opportunity to subscribe to an equivalent amount of class A common shares at that same price.

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