Moody’s Confirms Revlon’s Ba2 Term Loan Rating
Moody’s Investors Service confirmed Revlon Consumer Products Ba3 Corporate Family Rating (CFR) and Ba2 senior secured term loan rating, concluding the review for downgrade initiated on August 5, 2013 following the company’s announced $660 million debt-funded acquisition of The Colomer Group (TCG).
Moody’s said it also assigned a Ba2 rating to Revlon’s proposed $700 million add-on senior secured term loan and downgraded the company’s senior unsecured notes due 2021 to B2 from B1.
Moody’s confirmed Revlon’s ratings based on an expectation that the TCG acquisition will help the company maintain the improved operating stability achieved over the last few years, and that Revlon will continue to generate meaningful free cash flow.
The confirmation also reflects Moody’s view that Revlon is committed to reducing leverage meaningfully following the debt-funded TCG acquisition such that debt-to-EBITDA leverage declines and is sustained below 5.0x.
Moody’s said Revlon’s Ba3 CFR reflects the company’s strong global cosmetic brand franchises, good geographic and product diversification for a number of well-known beauty brands, modest scale relative to primary competitors, high leverage and event risks related to ownership by M&F Worldwide.
Moody’s said the negative rating outlook reflects the risk that operational shortfalls, additional acquisitions or Revlon’s utilization of cash will not be sufficient to reduce and sustain debt-to-EBITDA leverage below 5.0x.
To read the Moody’s Investors Services news release click here.