Revlon Inc. Ratings Lowered To 'CCC-' On Expected Liquidity Pressures; Outlook Negative

  • We expect the spread of the coronavirus will result in a swift and severe drop in consumer spending this year, as restrictive mandates to contain the outbreak and deflating confidence upend near-term consumer behavior.
  • We believe Revlon Inc.'s operating results will be significantly weaker than we previously expected, pressuring the company's liquidity.
  • We are lowering our issuer credit rating, to 'CCC-' from 'CCC+'.
  • Concurrently, we are lowering our issue-level rating on the company's senior secured term loan to 'CCC-' from 'CCC+', the '4' recovery rating remains unchanged. We are also lowering our issue-level ratings on the company's two tranches of senior unsecured notes to 'CC' from 'CCC', the '5' recovery ratings remain unchanged. We are removing the ratings from CreditWatch Negative where they were placed on Feb.13, 2020.
  • The negative outlook reflects the increasing risk that Revlon will be unable to refinance its near-term debt maturities. We could lower the ratings if a default, distressed exchange, or redemption appears to be inevitable.
NEW YORK (S&P Global Ratings) March 25, 2020—S&P Global Ratings today took the rating actions listed above.
The downgrade reflects our belief that Revlon Inc.'s operating performance will significantly deteriorate this year, further pressuring Revlon's liquidity.   The weakening consumer demand amid the spread of the coronavirus and a global recession will further exacerbate Revlon's ability to restore already-declining sales trends, and it increases the risk that Revlon won't be able to refinance upcoming maturities. The company's operating performance has been poor for years because of its own execution issues and structural headwinds in the mass beauty channel.
The negative outlook reflects the likelihood that we will lower our rating on Revlon if the company cannot refinance near-term debt maturities and that we expect an imminent default occurring over the next couple of quarters.
We could lower the rating on Revlon if we believe a default, distressed exchange, or redemption seems inevitable within six months. This could occur if Revlon does not make significant progress toward refinancing or if we believe it would encounter a liquidity crunch or payment default due to operational challenges.
We could raise the rating if Revlon addresses its near-term debt maturities by successfully refinancing its capital structure on reasonable terms while stabilizing its operating performance.
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