Revlon Inc, the cosmetics giant currently under bankruptcy protection, has reached an agreement with major creditors that will bring about a change in ownership and erase existing shareholders. The restructuring deal, still subject to approval from a U.S. bankruptcy judge, will allocate $44 million to Revlon’s unsecured creditors, who are typically the last to receive payment for their debts.

One significant aspect of this agreement is that it has managed to reconcile previously opposing factions of secured lenders and unsecured creditors. The Brandco lenders, classified as secured lenders, consist of private equity and hedge funds such as Ares Management and Oak Hill Advisors, who are collectively owed almost $3 billion.

In order to complete the restructuring agreement, Revlon must obtain court approval on April 3, a crucial step towards the company’s anticipated exit from bankruptcy on April 17, 2023. Nonetheless, Revlon has also disclosed that it is contemplating a potential sale of the company as an alternative to emerging from Chapter 11. Such a sale can proceed, provided that the offer is substantial enough to fully repay the Brandco lenders.

Revlon initially filed for bankruptcy in June due to its staggering debt burden of $3.5 billion, which severely hindered its ability to make timely payments to crucial suppliers in its cosmetics supply chain.

Ultimately, this deal offers a glimmer of hope for Revlon, as it presents a path towards financial recovery and the potential for a higher valuation through a potential sale. The approval of the restructuring agreement by the bankruptcy judge will be a crucial step in Revlon’s journey towards overcoming its financial challenges.

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