Revlon has signed a 'debt for equity exchange' agreement with Fidelity Management & Research and MacAndrews & Forbes - Revlon's principal shareholder - to strengthen the company's balance sheet and increase the liquidity and float of its common stock.
"This refinancing is a crucial step in the company's journey to achieve long-term profitable growth. This dramatic de-leveraging provides an important platform from which we can further build momentum," said Revlon CEO Jack Stahl.
Despite recording a net loss of $153.8 million, Revlon's net sales for the year rose 16 per cent to $1.29 billion. Sales growth however was absolutely concentrated in Revlon's fourth quarter, achieving a 73.3 per cent increase in comparison to a 2.6 per cent average for the first 9 months of 2003.
Revlon stated that the fourth quarter's positive turn-around primarily reflected significantly lower returns and allowances - borrowed back from 2002 growth-plan charges - and from a positive currency translation.
The company's continuing growth plan is claimed to involve increasing the effectiveness of the company's advertising and in-store promotional marketing, discontinuing select products and adjusting prices to strengthen the company's new product development process, in order to support the underlying business.
According to the new agreement MacAndrews & Forbes is to exchange an approximated $475 million of debt for equity, and the Institutional Investor - Fidelity Management and Research - is also to exchange $155 million.
In addition to the exchange offers Revlon's refinancing plan includes further rights and equity offerings to ensure that the debt reduction reach $830 million by the end of 2004 and $930 million by March 2006, the company announced.