Cosmetics giant Revlon Inc. is set to file for Chapter 11 bankruptcy as of next week, as it grapples with supply chain problems and heavy debt, according to people with knowledge of the matter.
Talks about a possible filing are not final and could change, said the people, who asked not to be named while discussing private talks. A representative for Revlon declined to comment.
Troubled debt news provider ReOrg was the first to report potential bankruptcy. Shares of Revlon closed down 53% on Friday at $2.05, the biggest single-day drop on record.
New York-based Revlon, owned by billionaire Ron Perelman’s McAndrews & Forbes, struggles between competition from Estée Lauder cos and several smaller companies that use social media to entice customers. Sales had declined years before the pandemic, which hit the company hard as well.
Revlon Chief Executive Officer Debra Perelman said in May to discuss quarterly results that demand for the company’s products was strong, but that “supply chain challenges are impacting our ability to meet this demand” and inflation There was a dent in the margins.
The company has more than $3 billion in long-term debt, and has reduced many defaults by cutting debt deals with creditors. Its annual interest expense last year was about $248 million, and it reported liquidity of $132 million as of March 31.
Revlon is in talks with creditors and is likely to change equity ownership of the firm, one of the people said.
Revlon owns more than 15 brands, including Elizabeth Arden and Elizabeth Taylor, which it markets in approximately 150 countries.