SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

Struggling American cosmetics major Revlon, has filed for Chapter 11 bankruptcy protection and consequently faces delisting from the New York Stock Exchange. Financial Times notes that this is the consequence of a severe downturn in the beauty industry during the pandemic, coupled with supply chain struggles and rising costs. Furthermore, Revlon has found it challenging to compete with celebrity backed brands and social media-savvy upstarts. Revlon’s sales never recovered to pre-pandemic levels and in 2021, they narrowly avoided bankruptcy after a fall out with one of their largest lenders, Carl Icahn. 

In the same vein, Revlon was downgraded to D from CCC- by S&P following the bankruptcy filing. Adding to its woes laid out above, the company has a high debt burden of $3.4bn and annual interest costs of $260mn, with huge upcoming debt maturities of about $1.364 billion in the next year. To support its day to day operations, the cosmetic company is seeking $975 million worth of loans from existing lenders which will keep it afloat in the meantime.

Separately, Citigroup’s appeal regarding a $500mn payment in the midst of its erroneous $900mn fund transfer blunder to Revlon over their loan’s principal is still pending decision from the US Courts. Analysts note that a ruling against Citigroup could be a big win for Revlon.

Revlon’s 6.25% bonds due in 2024 are trading at distressed levels of 5.75 cents on the dollar.

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