Revlon Consumer Products Corp.'s term loan "B" surged to 103-104 after new CEO David Kennedy announced plans to cut costs and improve cash flow. The bank debt had fallen a point to 102 before a conference call Monday with analysts in which Kennedy outlined his cost cuts. "There were some sellers, but once the debt moved down, buyers came back in. A lot of people have different views on the changes at the company. There is good two-way trading flow," said a trader.
Citigroup leads the $800 million term loan, which was amended in July. The amendment reset the senior leverage ratio at 5.5 to 1 through June 30, 2007, stepping down to 5 to 1 for the remaining term of the credit agreement. Pricing is LIBOR plus 6%. Banks failed to lower pricing to LIBOR plus 3% in May (CIN, 5/06). Revlon is seeking a further amendment, which would allow the company to add back to the company's definition of EBITDA up to $75 million of restructuring charges related to the discontinuance of the Vital Radiance brand and its organizational streamlining. Revlon expects to incur $29 million in restructuring charges, according to a filing with the Securities and Exchange Commission. A Revlon spokeswoman declined to comment on the trading of the company's debt.