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Familiar Foes Icahn and Perelman at Odds in Revlon Restructuring

Katherine Doherty and Scott Deveau
·3 min read

(Bloomberg) -- Billionaires Ronald Perelman and Carl Icahn are facing off as Revlon Inc. seeks to restructure its debt load and avert bankruptcy in the coming days.

Icahn, who is among the largest holders of $343 million of Revlon notes due next year, has been holding out on a proposed debt exchange that would loosen the company’s debt load and allow it to stave off a potential bankruptcy filing, according to people with knowledge of the matter. Icahn hasn’t participated in the exchange -- in which holders would be paid a significant discount to face value -- because he doesn’t believe it adequately compensates holders, the people said.

A representatives for Icahn, Revlon and Perelman’s holding company MacAndrews & Forbes declined to comment. The Wall Street Journal first reported elements of the fight.

Chief among Icahn’s concerns is that if Revlon pays down the portion of bonds that aren’t exchanged, the company would be using a large amount of cash to fully pay off a group of mostly retail holders the company may not be able to locate while participating investors take a haircut, the people said.

Past Clash

This isn’t the first time that Perelman, 77, and Icahn, 84, have been at odds. The billionaires clashed in the bankruptcy restructuring of Marvel Entertainment Group Inc. in the late 1990s, when Icahn led a group of creditors that wrested control of the comic book publisher from Perelman.

If Icahn continues to hold out, it could complicate Revlon’s exchange process, the people said. The company is continuing to negotiate with all creditors ahead of the deal’s Nov. 10 final deadline, they added.

Revlon is seeking to complete the exchange to avoid triggering a $1 billion loan repayment in mid-November if any of the bonds are left outstanding. The company doesn’t have the cash to pay down the debt if investors balk at the exchange, and is considering options including a Chapter 11 filing to stay in business if the swap fails, according to debt documents.

Institutional Support

Holders of around 27% of the bonds had signed onto the exchange as of Thursday, the company said in a statement. Revlon has been extending deadlines and tweaking terms of the deal in an effort to get more investors to join.

A group of institutional investors support Revlon’s restructuring efforts, but the company has had difficulty completing the exchange because a chunk of the bonds are held by mom-and-pop buyers who are less familiar with the swap process, Bloomberg previously reported. Revlon created a website asking investors to turn in their holdings and included stark warnings about the firm’s future.

Bondholders who participate in the exchange can receive cash or a combination of cash and new loans. The swap would value their holdings for as little as 27.5 cents on the dollar. The debt last changed hands at 27.25 cents, according to Trace.

Perelman, who owns 87% of the cosmetics company, has been shedding assets in recent months. His daughter, Debra Perelman, is Revlon’s chief executive.

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