Revlon Stock Crashes on Reports of Imminent Chapter 11 Bankruptcy
Updated at 9:47 a.m. EST
Revlon (ROUND) – Get the Revlon Inc. report. Shares extended their decline on Monday following a report suggesting the iconic cosmetics group could file for Chapter 11 bankruptcy in the coming days.
The Wall Street Journal reported late Friday that the group began talks with lenders last week to explore a way to reduce or restructure its $4.3 billion in debt. The Journal said a Chapter 11 filing could happen as soon as this week.
Last month, the group said it hoped to “ensure sufficient liquidity to support both our growth and our capital structure” as it faced headwinds in the supply chain and… other “emerging macroeconomic challenges that continue to impact businesses across most sectors”.
Revlon posted an 8% increase in net sales to $445 million for the three months ending March, and moved to a modest operating profit of $24 million on improved margins costs and lower restructuring charges.
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Revlon said it had approximately $70 million in cash at the end of March, with access to borrowing capacity of $65 million under a 2016 credit facility,
“While consumer demand for Revlon’s products remained strong throughout the quarter, supply chain challenges are putting pressure on our ability to meet that demand,” CEO Debra Perelman told investors. during a May 7 conference call. “Lack of availability or long delivery times for raw materials and components, as well as shortages and delays in all modes of transportation, lead to reduced supply to meet demand.”
“Additionally, we face rising costs due to global inflation which is putting pressure on both consumer wallets and our margins,” she added.
Shares of Revlon, which tumbled 52.8% on Friday, were down another 23.4% at the start of Monday’s session to change hands at $1.57 apiece, a move that would extend the decline in the market. share since the beginning of the year at around 87%.
Revlon had a market capitalization of $1.4 billion in October 2019, today’s ruling would peg it at around $95 million.