Cosmetics manufacturer Revlon is nearing bankruptcy

Revlon Inc. plans to apply to the court for bankruptcy protection (in accordance with Chapter 11 of the US Bankruptcy Code). The firm, whose securities quotations fell by 46%, faced too serious debt obligations. It is reported that the business has already begun negotiations with creditors, being on the eve of the next deadline for debt repayment.

A well-known cosmetics manufacturer, as the Wall Street Journal reported last week, cannot overcome the consequences of supply chain disruptions caused by a protracted pandemic. Sources familiar with the situation report that the company may apply as early as this week.

Earlier, Rusbankrot reported that the company miraculously managed to avoid insolvency in 2020. Then the firm was faced with the problem of repayment of bonds against the background of the outbreak of the pandemic. Buying habits have changed, and the company's profits have begun to decline rapidly.

Despite the restrained optimism expressed by Revlon investors recently and the return of the company's sales to the level preceding the pandemic, a large debt of the brand to creditors remains. The market value of the business has fallen by 70% over the past year, reaching $235.6 million. According to S&P Global Ratings experts, the cosmetics manufacturer continues to feel the need to raise capital in order to ensure liquidity.

Revlon continues to experience fierce competition from those whom American analysts call "digital upstarts".

The demand for cosmetics has almost recovered, as people began to get out of the house to the street more often. However, the formed logistical constraints do not allow the company to fully serve the formed demand.

Earlier, several lenders (including KKR& Co., Octagon Credit Investors LLC, etc.) provided the firm with a loan in the amount of $885 million. It was accidentally repaid by Citigroup Inc. at its own expense. Payments on it are scheduled for September 2023.

In total, by the end of March 2022, the company had accumulated debt in the amount of $3.31 billion.

Experts believe that the brand owned by Ron Perelman's private investment company MacAndrews & Forbes, which bought it in 1985, may soon change the main beneficiary. And although sales grew by 8% in the last quarter, the firm continues to balance on a fine line, remaining one step away from bankruptcy.