Revlon To Get Funding from Perelman Firm

Revlon Inc., the debt-laden cosmetics company, said a firm owned by Revlon chairman Ronald Perelman has agreed to provide up to $150 million to help grow Revlon’s business.

But steps needed to improve the business, including price cuts and elimination of some products, should cut $90 million to $130 million from earnings over the next several quarters, beginning in the fourth quarter, the company said. Perelman’s wholly owned MacAndrews & Forbes would provide a $100 million senior unsecured line of credit to Revlon under the plan. Revlon would also make a $50 million rights offering allowing shareholders to buy more class A stock. MacAndrews & Forbes would buy its pro rata share of the rights offering and also acquire any class A common stock not bought by shareholders.

The company said the plan and the effect on earnings before interest, taxes, depreciation and amortization of the cosmetics revamp would require a waiver of a covenant in its credit agreement in the fourth quarter and also require amendment of the agreement. The company said it believes it will receive the waiver and amendment, based on preliminary discussion with its bankers.