“While we have held onto certain positions for a many years, we have also periodically made dispositions,” Frances Townsend, MacAndrews & Forbes’s vice chairman, general counsel, and chief administrative officer said in a statement. “Our world and economy are transforming and with it we are evolving our portfolio, to allow for new and compelling opportunities given what’s ahead.”
Then there is Revlon, a company Perelman has owned and nurtured for 35 years. Last year, Revlon Inc. hired Goldman Sachs to “explore strategic alternatives,” according to Fortune, which is Wall Street code for trying to sell the company. That has not happened yet, for whatever reason, although a recent SEC filing indicated that Goldman was still working on the “strategic alternatives process.” Like Scientific Games, Revlon has plenty of problems too, including falling revenue and profitability and high leverage—estimated by Moody’s, the bond rating agency, in a May report at a rather unsustainable 11x debt-to-EBITDA.
And now Perelman, who owns about 87% of Revlon, and his daughter Debra, who has been CEO of Revlon since 2018, are busy trying to restructure the company’s $3 billion, or so, of debt. Perelman is a master of mastering complexity. In a filing with the Securities and Exchange Commission, the company announced it had successfully completed, on May 7, a $1.83 billion debt refinancing led by Jefferies, the investment bank, that will extend and amend the maturities of most of the company’s existing debt facilities until 2025. On May 8, Moody’s, the bond rating service, downgraded Revlon’s senior secured debt facility and its unsecured notes further into “junk,” or risky territory. “The negative outlook reflects Moody’s belief that Revlon financial leverage will remain unsustainably high,” it wrote. “Moody’s also has growing concerns related to the sustainability of the company’s capital structure given Revlon’s very high financial leverage, negative free cash flow, and the risk that earnings will continue to fall over the next year.”
Then, on July 27, Revlon announced it would start an exchange offer for $500 million of its senior notes due next year. No surprise, knowing Perelman, the offer is coercive. He is offering the noteholders 75 cents on the dollar in new debt with a maturity of 2024 plus five cents on the dollar in cash, or 80 cents on the dollar if existing noteholders tender the notes. Those holders who don’t tender their bonds by a certain date will get only the 75 cents on the dollar in new notes. Recently, the notes were trading around 33 cents on the dollar, suggesting there is little confidence the deal will get done—it requires 95% participation to happen—or if it does get done that Revlon will be able to pay the notes back when they are due in 2024.
Meanwhile, Revlon’s stock is down roughly 68% in 2020. The company’s market value is around $350 million, putting Perelman’s 87% stake at around $300 million. Perelman rarely engages with the media. On the contrary, he has been known to actively try to terminate stories about him he fears won’t be positive—a decade or so ago, he killed a Fortune article I wrote about him—and he declined my request for an interview. On July 22, Josh Vlasto, the MacAndrews & Forbes spokesman, tried to explain to Bloomberg what Perelman was up to these days: “Due to changes in the world both socially and economically, we have decided to reset MacAndrews & Forbes in a manner that will give us maximum flexibility both financially and personally. This will allow us to be opportunistic and flexible in looking at new situations.” Some two weeks later, Vlasto was gone—his duties taken up by Rubenstein, an outside P.R. firm.
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