Revlon Accused of Fraud Over $1.8B Loan
Traders in Revlon have accused the struggling beauty enterprise of “pillaging” mental home it had pledged as collateral for a $one.8 billion mortgage as component of a “brazen” plan to elevate new funds.
In a lawsuit submitted Wednesday, UMB Lender, the administrative agent for the loan companies, stated the collateral, which incorporates trademarks and other rights involved with “many of the very best acknowledged, nicely-proven beauty brand names in the world,” has been “ripped away and pledged to other loan companies.”
Revlon secured the $one.8 billion mortgage in 2016 to assistance finance its acquisition of the iconic Elizabeth Arden model. Since that deal, its small business has been strike by the shift to on the web browsing and, these days, the coronavirus pandemic, which left it struggling with a financial storm before this year.
“This circumstance is a stark example of a borrower that has overlooked continuously its legal obligations to its loan companies,” the accommodate states. “Covid-19 is no license to breach contractual commitments to loan companies, to have interaction in clear vote rigging, and to steal and reuse collateral for different needs.”
In accordance to The Wall Street Journal, UMB signifies loan companies which includes Brigade Capital Management, HPS Expense Associates, and Symphony Asset Management that “have used months resisting Revlon’s restructuring techniques.”
In a statement, Revlon stated the group had “repeatedly resorted to baseless accusations in an attempt to enrich on their own and damage the enterprise by blocking Revlon from performing exercises its contractual rights to safe the financing essential to execute our turnaround system and navigate the Covid-19 disaster.”
The accommodate alleges Revlon originally siphoned off component of the collateral for the 2016 mortgage to safe a $two hundred million mortgage in 2019 from Ares Management, offering the new loan provider “its possess, distinctive safety fascination in the incredibly similar home.”
The enterprise then allegedly negotiated a “bigger, bolder transaction” in Might 2020 that elevated another $880 million and was “devastating” for the 2016 loan companies.
To complete the deal, the accommodate states, Revlon devised an conclude-run all over the consent threshold by arranging a “sham” revolver mortgage with friendly investors who furnished the majority desired to approve the new financing.
Tommaso Boddi/Getty Pictures for Beautycon
