Revlon cuts spread on $1.8 billion term loan B to Libor plus 350 bps

By Sara Rosenberg

New York, July 21 – Revlon Consumer Products Corp. reduced pricing on its $1.8 billion seven-year covenant-light term loan B (Ba3/B+) to Libor plus 350 basis points from Libor plus 400 bps, according to a market source.

Also, the original issue discount on the term loan was revised to 99.5 from 99, the source said.

The B loan still has a 0.75% Libor floor, 101 soft call protection for six months and amortization of 1% per annum.

Included in the loan is a ticking fee of half the spread from days 31 to 75 and the full spread thereafter. As previously reported, the ticking fee was always contemplated but the exact structure wasn’t disclosed until this past Wednesday.

Mandatory prepayments include 100% of net cash proceeds from non-ordinary course asset sales, subject to baskets and the right to reinvest or commit to reinvest within 15 months with a six-month extension for committed amounts, 100% of debt issue proceeds other than permitted debt, and 50% of excess cash flow with step-downs to 25% at 3 times first-lien net leverage and 0% at 2.5 times first-lien net leverage.

The term loan B has a springing maturity to 91 days prior to the maturity date of the existing 5¾% secured notes due Feb. 15, 2021 if the notes remain outstanding and free liquidity does not exceed the principal amount of the notes by $200 million.

The accordion is the greater of $450 million and 90% of EBITDA, plus an unlimited amount subject to 3.5 times first-lien net leverage for pari passu debt and 4.25 times total net secured leverage for junior liens and unsecured debt, with 50 bps MFN with a 12-month sunset.

Commitments were scheduled to be due at 5 p.m. ET on Thursday.

Allocations are targeted for Friday, the source added.

The company’s $2.2 billion senior secured credit facility also includes a $400 million asset-based revolver.

Citigroup Global Markets Inc., Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Macquarie Capital (USA) Inc. and Barclays are the lead banks on the financing.

Proceeds will be used to help fund the acquisition of Elizabeth Arden Inc. for $14.00 per share in cash, representing an enterprise value of around $870 million, to refinance Elizabeth Arden’s existing debt and to refinance Revlon’s existing term loan and revolver.

Other funds for the transaction will come from $450 million of senior notes.

Assuming full realization of expected multi-year synergies and cost reductions of about $140 million, pro forma leverage is expected to be about 4.2 times net debt/adjusted EBITDA by the end of 2016.

Closing is expected by year-end, subject to approval by Elizabeth Arden’s shareholders, regulatory clearances and customary conditions.

Revlon is a New York-based beauty company. Elizabeth Arden is a prestige beauty products company based in Pembroke Pines, Fla.

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