Traders in Revlon have accused the struggling natural beauty corporation of “pillaging” mental house it experienced pledged as collateral for a $1.eight billion financial loan as element of a “brazen” scheme to elevate new capital.
In a lawsuit submitted Wednesday, UMB Bank, the administrative agent for the lenders, explained the collateral, which includes trademarks and other rights connected with “many of the best regarded, nicely-set up natural beauty manufacturers in the earth,” has been “ripped away and pledged to other lenders.”
Revlon secured the $1.eight billion financial loan in 2016 to enable finance its acquisition of the iconic Elizabeth Arden brand. Given that that offer, its business enterprise has been hit by the shift to online browsing and, currently, the coronavirus pandemic, which still left it experiencing a monetary storm previously this year.
“This case is a stark case in point of a borrower that has ignored regularly its authorized obligations to its lenders,” the match states. “Covid-19 is no license to breach contractual commitments to lenders, to interact in clear vote rigging, and to steal and reuse collateral for option functions.”
In accordance to The Wall Street Journal, UMB signifies lenders which includes Brigade Cash Management, HPS Expenditure Companions, and Symphony Asset Management that “have expended months resisting Revlon’s restructuring practices.”
In a assertion, Revlon explained the group experienced “repeatedly resorted to baseless accusations in an attempt to enrich themselves and damage the corporation by blocking Revlon from doing exercises its contractual rights to safe the financing necessary to execute our turnaround method and navigate the Covid-19 disaster.”
The match alleges Revlon initially siphoned off element of the collateral for the 2016 financial loan to safe a $200 million financial loan in 2019 from Ares Management, providing the new loan provider “its personal, distinctive safety interest in the pretty same house.”
The corporation then allegedly negotiated a “bigger, bolder transaction” in May possibly 2020 that lifted an additional $880 million and was “devastating” for the 2016 lenders.
To comprehensive the offer, the match states, Revlon devised an close-operate all over the consent threshold by arranging a “sham” revolver financial loan with friendly investors who furnished the the vast majority necessary to approve the new financing.
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