Item 1.01. Entry into a Material Definitive Agreement.
Amendment to Credit Facilities; New Tranche B Term Loan Facility
On October 23, 2020 (the "Effective Date"), Revlon Consumer Products Corporation
("Products Corporation"), the direct wholly-owned operating subsidiary of
Revlon, Inc. ("Revlon" and together with Products Corporation, the "Company")
entered into the Amendment No. 5 (the "Fifth Amendment") to the Asset-Based
Revolving Credit Agreement, originally dated as of September 7, 2016 (such
original agreement as amended prior to the Fifth Amendment, the "Credit
Agreement"), by and among Products Corporation, as borrower, Revlon, certain
local borrowing subsidiaries from time to time party thereto, certain lenders
and issuing lenders party thereto and Citibank, N.A., as administrative agent,
collateral agent, issuing lender and swingline lender.
The Fifth Amendment amends and restates the Credit Agreement to add a new
Tranche B consisting of $50,000,000 aggregate principal amount of "first-in,
last-out" Tranche B term loans (such new Tranche B, the "New Tranche B Term Loan
Facility" and the loans incurred thereunder, the "Tranche B Term Loans" or the
"ABL FILO Term Loans"). The Credit Agreement, as amended by the Fifth
Amendment, is hereinafter referred to as the "Amended Credit Agreement". The
Fifth Amendment also requires Products Corporation to maintain Excess
Availability (as defined in the Amended Credit Agreement) of at least
$85,000,000 from the Effective Date until the transactions contemplated by the
Exchange Offer (as defined below) are consummated (such date, the "Exchange
Offer Effective Date"). As a result, Products Corporation repaid $35,000,000 of
Tranche A loans under the Amended Credit Agreement.
On the Exchange Offer Effective Date, As-Adjusted Liquidity must be at least
$175,000,000 and Products Corporation cannot hold more than $100,000,0000 in
cash or Cash Equivalents (as defined in the Amended Credit Agreement).
Furthermore, the Fifth Amendment provides that a reserve of $30,000,000 will be
automatically and immediately established against the Tranche A Borrowing Base
(as defined in the Amended Credit Agreement) if the results of ongoing
appraisals and field exams are not delivered to the administrative agent prior
to the occurrence of certain specified defaults.
The Tranche B Term Loans, or ABL FILO Term Loans, will be provided to eligible
holders of Products Corporation's 5.75% Senior Notes due February 15, 2021 (the
"Notes") who validly tender their Notes as part of Products Corporation's
previously-announced exchange offer and consent solicitation (the "Exchange
Offer") pursuant to which Products Corporation is offering to exchange any and
all of its outstanding $342,785,000 aggregate principal amount of Notes for, at
the holder's option, consideration consisting of (i) cash ("Cash Consideration")
or (ii) if the holder is an Eligible Holder (as defined below), a combination of
cash, Tranche B Term Loans and New BrandCo Second-Lien Term Loans (as defined in
the Offering Memorandum) ("Mixed Consideration"), on the terms set forth in the
Amended and Restated Offering Memorandum and Consent Solicitation Statement (the
"Offering Memorandum"), dated October 23, 2020. The Exchange Offer will expire
on November 10, 2020, subject to earlier termination, withdrawal or extension by
the Company at its sole and absolute discretion.
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The Tranche B Term Loans will rank equal in right of payment with all existing
and future unsubordinated indebtedness of Products Corporation and the
guarantors under the Amended Credit Agreement. The Tranche B Term Loans will
rank junior in right of payment to the existing Tranche A Revolving Loans. The
Tranche B Term Loans will mature six months after the maturity date of the
Tranche A Loans (and any extension thereof in part or in whole). The Tranche B
Term Loans will bear interest at a rate of LIBOR (subject to a 1.75% floor) plus
8.50% per annum. Interest on the Tranche B Term Loans will accrue from the
settlement date or early settlement date of the Exchange Offer, as applicable.
The borrowing base for the Tranche B Term Loans consists of an advance rate of
100% of eligible collateral with a customary push down reserve. The collateral
for the Tranche B Term Loans consists of: (i) a first-priority lien on accounts
receivable, inventory, cash, negotiable instruments, chattel paper, investment
property (other than capital stock), equipment and real property of Products
Corporation and the subsidiary guarantors, subject to customary exceptions (the
"Priority Collateral") and (ii) a second-priority lien on substantially all
tangible and intangible personal property of Products Corporation and the
subsidiary guarantors, subject to customary exclusions (other than the Priority
Collateral).
Products Corporation will pay customary fees to Alter Domus (US) LLC as the
administrative agent for the New Tranche B Term Loan Facility.
The effectiveness of the New Tranche B Term Loan Facility was subject to
customary conditions precedent, including customary certificates, legal opinions
and representations and warranties.
Except as to maturity date, interest, borrowing base and differences due to
their nature as term loans, the terms of the New Tranche B Term Loans are
otherwise substantially consistent with the Tranche A Revolving Loans.
The foregoing description of the Amended Credit Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Amended Credit Agreement. A copy of the Amended Credit Agreement is filed with
this Current Report on Form 8-K as Exhibit 4.1 and is incorporated herein by
reference.
Item 2.02. Results of Operations and Financial Condition.
Preliminary Unaudited Liquidity Information
The preliminary and unaudited liquidity information set forth in this Item 2.02
(the "Preliminary Unaudited Liquidity Information") is derived from preliminary
internal financial reports of Revlon as of and for the three months ended
September 30, 2020. The Preliminary Unaudited Liquidity Information will be
subject to revision based on Revlon's financial closing procedures and controls
associated with the completion of its quarter-end financial reporting, including
the quarterly closing and internal review process, the finalization of various
items, all customary reviews and approvals, and completion by Revlon's and
Products Corporation's independent registered public accounting firm of its
required review of their financial statements for the quarter ended September
30, 2020. Accordingly, actual final results for the periods presented may differ
from the Preliminary Unaudited Liquidity Information, and such differences may
be material. Revlon expects to file its quarterly report on Form 10-Q for the
quarter ending September 30, 2020 according to the SEC filing requirements.
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Preliminary Unaudited Liquidity Information
At September 30, 2020, Revlon had an estimated liquidity position of
approximately $340 million, consisting of: (i) approximately $268 million of
unrestricted cash and cash equivalents (with approximately $94 million held
outside the U.S.); (ii) approximately $53 million in available borrowing
capacity under the Credit Agreement (as defined above), which had approximately
$292 million drawn at such date; (iii) approximately $30 million in available
borrowing capacity under its Second Amended and Restated 2019 Senior Line of
Credit Facility between Products Corporation and MacAndrews & Forbes Group, LLC
which had no borrowings at such date; and less (iv) approximately $11 million of
outstanding checks. Under the Credit Agreement, as the Company's consolidated
fixed charge coverage ratio was expected to be greater than 1.0 to 1.0 as of
September 30, 2020, all of the approximately $53 million of remaining
availability under the Credit Agreement was available as of such date.
Revlon estimates that its total liquidity was approximately $347 million as of
October 16, 2020, consisting of: (i) approximately $267 million of unrestricted
cash and cash equivalents (with approximately $81 million held outside the
U.S.); (ii) approximately $57 million in available borrowing capacity under the
Credit Agreement, which had approximately $310 million drawn at such date; (iii)
approximately $30 million in available borrowing capacity under the Second
Amended and Restated 2019 Senior Line of Credit Facility between Products
Corporation and MacAndrews & Forbes Group, LLC, which had no borrowings at such
date; and less (iv) approximately $7 million of outstanding checks. Under the
Credit Agreement, as the Company's consolidated fixed charge coverage ratio was
expected to be greater than 1.0 to 1.0 as of September 30, 2020, all of the
approximately $57 million of remaining availability under the Credit Agreement
was available as of October 16, 2020.
Item 2.03. Creation of a Direct Financing Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
Please see the discussion set forth under Item 1.01, "Entry into a Material
Definitive Agreement," of this Form 8-K, which discussion is incorporated herein
by reference in its entirety.
Item 8.01 Other Items.
On October 23, 2020, Products Corporation amended certain material terms of its
previously-announced Exchange Offer. As described more fully herein, these
amendments include (i) modifications to the Mixed Consideration (as defined
below), (ii) modifications to the conditions precedent to the Exchange Offer and
(iii) the addition of a most favored nation provision (the "MFN Provision").
The transaction support agreement with the lenders under the 2020 BrandCo Term
Loan Agreement is scheduled to expire on November 2, 2020. The Products
Corporation is currently in the process of pursuing an extension to that
expiration date to accommodate the amended Exchange Offer timetable.
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Modifications to the Mixed Consideration
For each $1,000 principal amount of Notes validly tendered, Eligible Holders (as
defined in the Offering Memorandum) electing Mixed Consideration will receive: a
combination of (1) $200 in cash (plus a $50 early tender/consent fee payable if
such Notes are tendered at or before 11:59 p.m. New York City time on November
5, 2020 (the "Early Tender Deadline"), for an aggregate of $250 in cash plus (2)
(a) the Per $1,000 Pro Rata Share (as defined below) of $50,000,000 aggregate
principal amount of ABL FILO Term Loans and (b) the Per $1,000 Pro Rata Share
(as defined below) of $75,000,000 aggregate principal New BrandCo Second-Lien
Term Loans (as defined in the Offering Memorandum).
The "Per $1,000 Pro Rata Share" is (1) $1,000, divided by (2) the aggregate
principal amount of Notes tendered by for Mixed Consideration by all Eligible
Holders and accepted by Products Corporation for payment in the Exchange Offer.
The Cash Consideration (as defined in the Offering Memorandum) being offered in
the Exchange Offer remains unchanged.
Modifications to Conditions Precedent
Products Corporation has eliminated the condition precedent to the completion of
the Exchange Offer that a minimum of 95% of all aggregate principal amount of
Notes outstanding be tendered in the Exchange Offer.
Products Corporation has included a new condition to the completion of the
Exchange Offer that Products Corporation's As-Adjusted Liquidity (as defined
below) be not less than $175,000,000 plus the aggregate principal amount of
Notes (together with accrued and unpaid interest thereon) outstanding after
completion of the Exchange Offer.
The Company's "As-Adjusted Liquidity" is defined as: (1) unrestricted cash
(including cash generated from operations) after completion of the Exchange
Offer, plus (2) "Excess Availability" under the Amended Credit Agreement after
completion of the Exchange Offer, less (3) accrued and unpaid
transaction-related professional fees.
As of October 16, 2020, the Company's As-Adjusted Liquidity was a total of
approximately $308 million, consisting of: (1) $267 million of unrestricted cash
(not reflecting any cash generated from operations or any other items that might
arise after such date), plus (2) $57 million of "Excess Availability" under the
Amended Credit Agreement (not giving effect to an $85 million availability block
currently in effect that will terminate as of the date of completion of the
Exchange Offer and not reflecting any reserves or other adjustments to the
Borrowing Base thereunder that may be imposed by the lenders prior to the
settlement date of the Exchange Offer and Consent Solicitation), less (3)
approximately $16 million of accrued and unpaid transaction-related professional
fees.
All other conditions precedent remain unchanged.
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Most Favored Nation Provision
After the completion of the Exchange Offer and before November 17, 2020, if
Products Corporation enters into any agreement with a party (other than a
natural person) (each, a "Subsequent Agreement Party") that provides for
consideration per $1,000 of Notes in excess of the sum of (x) the Mixed
Consideration per $1,000 of Notes and (y) the Consent Fee (as defined in the
Offering Memorandum) per $1,000 paid in the Exchange Offer, Products Corporation
will use its reasonable best efforts to cause each Eligible Holder (as defined
in the Offering Memorandum) that tendered Notes that were accepted for payment
in the Exchange Offer for Mixed Consideration (each, a "Mixed Consideration
Tendering Holder") to receive additional consideration in respect of each $1,000
of Notes such Mixed Consideration Tendering Holder tendered that (in the good
faith determination of Products Corporation) makes the aggregate consideration
paid per $1,000 of such Notes to such Mixed Consideration Tendering Holders
substantially equivalent to the consideration paid per $1,000 of Notes to the
Subsequent Agreement Party. For the avoidance of doubt, the foregoing shall not
apply to payments made through DTC in accordance with the terms of the Indenture
governing the Notes.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
4.1 Amended and Restated Asset-Based Revolving Credit Agreement, dated
October 23, 2020, among Revlon Consumer Products Corporation, Revlon,
Inc., the other loan parties and lenders party thereto, and Citibank,
N.A.
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