Revlon Inc. (NYSE:REV) closed up 47.6% today on news that the cosmetics giant could be poised to substantially cut its debt load.
The news comes on Revlon’s announcement of a debt-exchange offer that could potentially keep the company out of bankruptcy. Revlon aims to buy back around $343 million of 5.75% in bonds with a November 16 default deadline.
Revlon has angered some bondholders — including billionaire Carl Icahn — by telling them they will only get 32 cents on the dollar in cash because it can’t find the holders of about $90 million in bonds, who will now get paid in full.
While it can be normal for companies to have mystery bondholders, Revlon’s situation doesn’t exactly fit the mold…
“It’s certainly not customary to have that percentage be the magnitude of 26 percent,” Peter Kaufman, a distressed investment banker and head of Gordian Group LLC, told the New York Post.
If a deal doesn’t happen before the November 16 deadline, Revlon could be forced into bankruptcy proceedings — and its stock could become worthless.
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