Citigroup Pays Revlon Lenders Nearly $900 Million by Mistake -- Update
By Becky Yerak and Alexander Gladstone
Citigroup Inc. paid nearly $900 million by mistake to Revlon
Inc. lenders and is asking for the money to be returned, according
to people familiar with the matter.
Lenders that sued Revlon on Wednesday over its
debt-restructuring tactics were surprised to learn Thursday they
had been fully repaid on a loan issued in 2016, these people said.
Citi executives were soon asking for the money back, saying it was
paid inadvertently due to an operational error, the people familiar
The lenders were paid the full principal and accrued interest on
the loan, one of the people said. The money didn't come from
Revlon, another person familiar said.
Revlon has been at loggerheads with lenders holding the 2016
loan, including Brigade Capital Management LP, HPS Investment
Partners LLC and Symphony Asset Management. The lawsuit filed
Wednesday in New York federal court accused Revlon of moving
valuable brand assets beyond their reach to use as collateral for
The lawsuit said the cosmetics company had breached its loan
agreements by siphoning off intellectual property including those
for American Crew, Elizabeth Arden, Almay and other brands,
transferring them to subsidiaries and pledging them as
Backed by billionaire Ron Perelman's MacAndrews & Forbes,
Revlon has been struggling with a large debt load, and more
recently, headwinds stemming from the coronavirus pandemic's
devastating impact on American retailing.
Revlon is one of several private equity-backed companies hit
hard by the pandemic that have shifted assets away from lenders to
help secure rescue financing elsewhere. Businesses that have used
similar tactics to weather coronavirus disruptions include circus
company Cirque du Soleil Entertainment Group and booking platform
Travelport Worldwide Ltd.
Even before the coronavirus pandemic began hammering the retail
industry, Revlon was struggling, along with other mainstream
cosmetics companies, to keep its grip on shoppers who increasingly
were buying items online and patronizing specialty beauty
Revlon on Wednesday said the lenders had "resorted to baseless
accusations in an attempt to enrich themselves and hurt the company
by blocking Revlon from exercising its contractual rights to secure
the financing necessary to execute our turnaround strategy and
navigate the Covid-19 crisis."
Citi, the agent for the 2016 lending agreement, also was named
in the lawsuit as a defendant. The bank caught Thursday's error
quickly and initiated a process to recall the money, a person
familiar with the matter said. Some lenders have begun returning
what they received, this person said.
To help stay afloat, Revlon last year borrowed $200 million from
Ares Management Corp. and followed up with several other loan and
restructuring transactions earlier this year. Revlon is now
attempting a bond exchange designed to trim its multibillion-dollar
Write to Becky Yerak at firstname.lastname@example.org and Alexander
Gladstone at email@example.com
(END) Dow Jones Newswires
August 13, 2020 20:57 ET (00:57 GMT)
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