On February 2, 2018, Moody’s Investors Service downgraded Revlon Consumer Products Corporation’s corporate family rating to Caa1 from B2, probability of default rating to Caa1-PD from B2-PD, senior secured term loan rating to B3 from B1 and its unsecured global notes rating to Caa3 from Caa1. According to Moody’s, the downgrades reflect Moody’s expectation that Revlon’s financial leverage will remain unsustainably high over the next year. Revlon’s progress at deleveraging following the 2016 acquisition of Elizabeth Arden has been very slow and Moody’s estimates that Revlon’s 2017 debt to EBITDA exceeded 11x. Moody’s expects leverage reduction to be hampered by low organic earnings growth over the next year. Revlon’s operations are not fully stabilized and face challenges that could affect sales and raise the cost and time to implement some more complex restructuring moves.
On February 6, 2018, S&P Global Ratings lowered its corporate credit rating on Revlon, Inc. to CCC+ from B-, its $1.8 billion term loan B to CCC+ from B- and its $500 million notes due 2021 and $450 million notes due 2024 to CCC from CCC+. According to S&P Global, the rating action reflects S&P’s belief that Revlon’s operating performance will remain weak and that debt leverage will remain very high at roughly 9x in the upcoming year. Read more on distressed companies.