Cosmetics giant Revlon Inc. is preparing to file for Chapter 11 bankruptcy as soon as next week as it grapples with supply chain problems and a hefty debt load, according to people familiar with the matter.
Talks about the potential filing are not final and could change, said the people, who asked not to be named when discussing private negotiations. A Revlon representative declined to comment.
First, the distressed debt news provider Reorg reported on the possible bankruptcy. Shares of Revlon plunged 53% on Friday, the biggest one-day drop on record, to close at $2.05.
New York-based Revlon, owned by billionaire Ron Perelman’s MacAndrews & Forbes, struggled with competition from Estee Lauder Cos. and a host of smaller businesses using social media to attract customers. Sales were already declining years before the pandemic, which also hit the company hard.
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bonusRevlon chief executive officer Debra Perelman said in a conference call in May to discuss the quarterly results that demand for the company’s products is strong, but “supply chain challenges are putting pressure on our ability to meet that demand” and inflation squeezes margins.
The company has more than $3 billion in long-term debt and has narrowly averted multiple defaults by cutting debt deals with creditors. Annual interest expense was nearly $248 million last year and the company reported cash and cash equivalents of $132 million as of March 31.
Revlon is in talks with creditors and the company’s shareholdings are likely to change, one of the people said.
Revlon has more than 15 brands, including Elizabeth Arden and Elizabeth Taylor, which it sells in nearly 150 countries.
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