Makeup shake-up

Revlon and its creditors have agreed to a debt restructuring deal that will see it come out of bankruptcy protection if approved by a judge.

December 20, 2022

A tough year for billionaires. Zuckerberg destroyed shareholder value by building a poor man’s matrix, Elon damaged Tesla with his poorly timed purchase of Twitter, and SBF is in a rat-infested cell, using a bucket as a toilet. Warren Buffett, who had a good year, famously said, “only when the tide goes out do you discover who's been swimming naked.” Safe to say the tide is out.

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Credit: REUTERS/Hannah McKay

Ugly outcome for Revlon shareholders

Revlon and its creditors have agreed to a debt restructuring deal that will see it come out of bankruptcy protection if approved by a judge. The cosmetics giant filed for bankruptcy in June after it said it could no longer bear the weight of $3.5 billion in debt and was no longer able to pay suppliers.

Upon filing for bankruptcy, an army of retail traders began purchasing Revlon shares driving the price from $1 to $8. The hope was that Revlon would follow the path of fellow meme stock Hertz, which delivered a surprise return for shareholders when demand for car rental surged as the pandemic eased.

No similarity has materialised for beauty products, and so the proposed deal will wipe out current shareholders (including 85% owner Ron Perelman) and transfer ownership to the company’s creditors. Without an agreement, things could have become messy for a couple of reasons, including that $900 million was repaid to the wrong creditor in 2020, thanks to a mistake by Citigroup ($).

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