Revlon Consumer Products Corp.’s new $800 million “B” loan broke at 102 1/4 earlier today and traders said it is already trading at 103 1/4. “It should trade well, the market liked the deal,” one trader said.
The refinancing deal is led by Citigroup and also includes a $160 million revolver. The “B” loan was upsized $50 million during syndication from $750 million. Pricing on the loan also came in at LIBOR plus 6%, which was the tight end of originally floated terms. In addition, the call protection was eased from 105, 103, 102, 101, over four years respectively, to 105, 103, 101, over three years. One banker said hedge funds were the main buyers of the loan, but some par funds also participated.
The loan is designed to increase Revlon’s near-term liquidity position, replacing credit facilities that were likely to be in covenant violation as early as January 2005, noted Moody’s Investors Service (LMW, 6/28). Proceeds are being used to refinance Revlon’s existing bank debt and also fund a tender offer for the company’s $363 million of 12% notes. But despite the liquidity improvements, Moody’s still has concerns over Revlon’s cash flow. Moody’s anticipates negative free cash flow over the next year and Revlon has limited alternative liquidity sources with the vast majority of its collateral being pledged to the senior credit facilities. Maria Sceppaguercio, a Revlon investor relations oficial, did not return calls.
Approximately 82% of the total issued and outstanding principal amount of the notes have been offered. According to a release from Revlon, holders of the 12% Notes have been granted additional time due to the July 4th holiday weekend. In addition to extending the early consent date, Revlon also extended the pricing of the new 12% notes until tomorrow.