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Ron Perelman’s Revlon is Grappling with “Mysterious” Holders of $90M in Bonds

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By: Benyamin Davidsons

 

Ron Perelman’s Revlon, is in a bit of a bind.   The mysterious holders of roughly $90 million in company bonds are missing in action and can’t be found to negotiate with.   As reported by the NY Post, the unusual vanishing act on the part of these bond holders could even potentially push the company into bankruptcy.

 

The cosmetics giant has been working to negotiate the refinancing of about $343 million of bonds, prior to a Nov. 16 default deadline. The talks were going well, until some bondholders, including billionaire Carl Icahn, found out that the company won’t be able to afford to pay over 32 cents on the dollar in cash, because the holders of some $90 million of bonds can’t be found or negotiated with and so those holders will need to be paid in full.

 

Revlon has given its bondholders until Tuesday at 5 p.m. to exchange their debt for 32 cents in cash, or take a combination of cash and new loans worth about 50 cents. As per the Post, Revlon can only extend the deadline by a few days.  The problem is that the default date, Nov. 16, is rapidly approaching and if an agreement is not reached by then, bankruptcy may become the only option.

 

Some of bond holders feel jilted to accept the offer knowing that other mysterious bondholders will be paid in full.  While it is normal for companies to put aside 100 percent of a bond’s value for holders who can’t be reached during a debt restructuring, the percentage of those bondholders is usually about three to five percent.  In this case, the MIA bondholders account for 26 percent of the total.

 

Despite this hurdle, there is a good chance that a deal will be made soon.  That’s because the alternative of a bankruptcy, would send the bond values down to 10 cents, as per one source for the Post.  For Perelman’s company, MacAndrews & Forbes, which owns 87 percent of Revlon, bankruptcy would mean the loss of its roughly $300 million equity stake.

 

Perelman, the 77-year-old billionaire investor and philanthropist, has of late been selling off multiple facets of his vast business as well as personal assets.  In July, he sold his company’s 70 percent stake in Humvee maker AM General at a fire sale price.  Perelman has also tapped the major auction houses to sell hundreds of millions of dollars’ worth of art in an effort to “reset my priorities” and have “a simpler life”, as he told Vanity Fair at the time.

 

 

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