Revlon Files for Bankruptcy, Another Fiasco for Ron Perelman

Revlon, the cosmetics giant controlled by the billionaire Ron Perelman, and whose reins he handed to his daughter Debra in 2018, has filed for bankruptcy protection. It is the latest blow to Perelman’s empire following years of headlines about his shaky financial position.In a statement, the company partly blamed its liquidity problems on supply-chain issues…

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Revlon, the cosmetics giant controlled by the billionaire Ron Perelman, and whose reins he handed to his daughter Debra in 2018, has filed for bankruptcy protection. It is the latest blow to Perelman’s empire following years of headlines about his shaky financial position.

In a statement, the company partly blamed its liquidity problems on supply-chain issues and inflation, adding that “the Chapter 11 filing will allow Revlon to strategically reorganize its legacy capital structure and improve its long-term outlook.”

Perelman acquired the business in 1985, but over time it racked up more than $3 billion in debt.

As of March 31, Perelman’s firm MacAndrews & Forbes controlled more than 85 percent of the company’s stock, according to public filings. Some of those shares have been pledged as collateral for his business’ other debts, the filings said.

Revlon’s woes have been an additional anchor on MacAndrews & Forbes’ performance. As of Thursday morning, the makeup business’ stock had fallen 85 percent in just 12 months.

The news will do little to improve perceptions about Perelman’s financial standing, as the billionaire has been aggressively ditching assets for years.

A profile in The New York Times in January highlighted some portions of the ongoing fire sale—as the selloff has been viewed externally—including a pair of jets and art valued in the tens of millions of dollars. But it didn’t answer core questions about just how bad things had become for Perelman, or whether his overall balance sheet is at risk.

Also in January, the billionaire offloaded one of his Hamptons mega-estates for $84 million, more than $30 million less than its original asking price.

Perelman argued in the fall of 2020 that the selloff was closer to an ordinary restructuring than a fire sale. “Like most American businesses, MacAndrews and Forbes and its portfolio businesses were hit hard by the coronavirus pandemic,” he wrote in a statement. His spokesperson insisted to Bloomberg News that Perelman remained “committed to his considerable philanthropy.”

But last summer, Perelman lost the naming rights to a residential college at Princeton University that had been conferred after he and Debra pledged $65 million in 2018. (She graduated from the Ivy in 1996.)

A source familiar with the matter previously told The Daily Beast that the Perelmans had not made any payments toward the pledge, and the university declined a request to renegotiate the payment schedule.

Perelman, whose spokesperson declined to comment, has retained the naming rights to a performing arts center under construction near the World Trade Center, which is slated to open in 2023.

As for Revlon, the company said as part of the bankruptcy filing that it “expects to receive $575 million” of debtor-in-possession financing that will enable it to continue operating day-to-day.

“Today’s filing will allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth,” Debra Perelman said in the statement.

In a January review of the business’ credit strength, Moody’s noted that Revlon had “very high leverage” and cash-flow weaknesses that were “negatively affected by shifting consumer buying preferences away from department stores, high competition, and reduced spending on certain beauty products amid the pandemic.” The ratings agency said there was no certainty about “when the company’s operations will meaningfully improve even though the company is aggressively reducing costs.”

Revlon laid off large numbers of workers in 2020, which it said at the time would lead to more than $100 million in annual savings by the end of this year.

The company has been stunted by its slow adaptation to the digital age. As of 2018, e-commerce accounted for just 2 percent of Revlon’s overall sales. That figure quickly shot up to 20 percent by 2020, the company said, though the growth clearly wasn’t enough to offset its liabilities.

The looming question for Perelman: Which of his assets might fall next?

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