Revlon disclosed that it has entered into a commitment letter with Citigroup and Bank of America Merrill Lynch providing a $1.8 billion leveraged loan, a $400 million asset-based revolver, and up to $400 million of a senior unsecured bridge loan in connection with the planned $870 million acquisition of Elizabeth Arden. Additionally, Revlon is seeking to privately place $400 million of senior unsecured notes.
The debt financing will be used to fund the acquisition as well as refinance Revlon’s and Elizabeth Arden’s debt. As of March 31, 2016, Revlon had $647.7 million outstanding under its B term loan due 2017 (L+250, 0.75% LIBOR floor) and $649.5 million outstanding under its B term loan due 2019 (L+300, 1% floor).
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In the secondary, Revlon’s loans have been up around par. Holders of Revlon 5.75% notes due 2021 have held on to the debt, trade data show. The paper last changed hands at par on June 10, and trading on the notes was light leading up to the announcement. Elizabeth Arden’s 7.375% notes due 2021 saw greater gains. The paper, also not an active mover in the secondary market, changed hands at 102.25 on Friday morning, down slightly from the 102.75 price on Thursday afternoon. Prior to this, however, the notes last sold on May 26 at 72 and a quarter, trade data show.
Revlon’s existing 5.75% notes, which totaled $492.7 million as of March 31, though, will remain outstanding.
Elizabeth Arden, meanwhile, as of March 31, had $42.5 million in borrowings and $3.4 million in letters of credit outstanding under its $300 million revolver due December 2019, $25 million in outstanding borrowings under its second-lien revolver, and $350 million outstanding under its 7.375% senior notes due March 2021.
Revlon expects pro forma leverage will be roughly 4.2x net by the end of 2016.
Revlon and Elizabeth Arden yesterday announced that they have signed an agreement under which Revlon will acquire the outstanding shares of Elizabeth Arden for $14 per share. The acquisition is expected to close by the end of 2016.
New York–based Revlon sells beauty and personal care products. The company’s shares trade on the NYSE under the ticker REV. Elizabeth Arden, which is based in Miramar, Fla., also sells beauty products. Elizabeth Arden’s shares trade on the Nasdaq under the ticker RDEN. Elizabeth Arden is rated CCC+/Caa1. — Richard Kellerhals/Jakema Lewis
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