Call protection and a high coupon boosted Revlon's new $840 million term loan when it broke into the secondary market last week. The loan broke at 100 3/4-101 1/4 and traded up to 101 5/8-102. Citigroup and JPMorgan lead the loan, which refinances the company's existing $800 million term loan.
Pricing was initially talked at LIBOR plus 3 1/2%, but was bumped up to LIBOR plus 4% on investor push back, according to a buysider. The interest rate on Revlon's prior $800 million term loan was LIBOR plus 6%. The new loan has 102 call protection for two years and then 101 call protection. An investor said he is a fan of the loan because of the call protection and generous coupon. But his view of the company was not as positive. "The company is not doing well at all. We are not expecting it to deteriorate further," he said. "Its cash flows are horrible. But with that coupon and call protection..."
Revlon recorded a $100.5 million net loss in the third quarter of 2006, compared with a $65.4 million net loss in the same period of 2005. It made a $57 million operating loss in the third quarter related to restructuring, the discontinuance of its Vital Radiance brand and executive severance. A call to Alan Ennis, cfo, was not returned. A spokeswoman declined comment.