Revlon plans to shed several of its brands

Company is looking to raise $500 million as its losses widen

October 02, 1999|By BLOOMBERG NEWS

NEW YORK -- Revlon Inc., whose namesake brand is the biggest seller in U.S. discount stores and drugstores, said yesterday that it is in talks to sell its Latin American and professional brands for more than $500 million after billionaire financier Ronald Perelman failed to find a buyer for the entire company.

Revlon stock fell $6.25, or 34 percent, to $12 in trading of 3.61 million shares, more than 16 times the three-month daily average.

Perelman is focusing on those brands that generate 80 percent of sales, including Revlon, Almay and Ultima II cosmetics.

The decision to shed smaller businesses comes after a six-month search for a buyer who would pay his estimated $40-a-share asking price, analysts said.

"They wanted top dollar for a company that's in a weakened state, and they couldn't get it," said Robert Izmirlian, Standard & Poor's consumer-products analyst.

The Latin American and professional businesses are expected to be sold by March 31, and generate about $450 million a year in sales. The professional unit sells hair-care products to salons, while the Colorama, Juvena, Bozzano and Plusbelle brands are sold mainly in Brazil and Argentina.

Revlon did not identify potential buyers. Last year, the company had total sales of $2.25 billion.

The company expects a third-quarter loss, before charges, of $3.10 to $3.20 a share, and a 1999 operating loss, before charges, of $70 million to $80 million.

As a result, Revlon will not be in compliance with some financial covenants under existing credit agreements.

The company is in talks with bank lenders about amending the agreements. It is also cutting shipments to retailers, and will forgo planned sales of about $280 million in new and established products to accelerate a program to reduce inventories. The company said inventory imbalances have made it difficult to introduce new products.

Its brands are facing new competition in the United States this year from Procter & Gamble Co.'s Oil of Olay and Johnson & Johnson's Neutrogena brands.

Pub Date: 10/02/99

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