Bankrupt Revlon Borrows $375-Million To Shore Up Supply Chain
Revlon Inc. has received bankruptcy court approval to borrow $375 million and stated that the funds will be used to shore up supply chain issues that would otherwise jeopardize the cosmetic maker's sales during the busy Christmas season, Dietrich Knauth reported for Reuters.
Photo Insert: Revlon will retain about $300 million of the initial bankruptcy loan for day-to-day business purposes, and use $75 million to pay down debts at foreign subsidiaries that are not part of the US bankruptcy.
After hearing testimony that Revlon was down to $6 million in cash and struggling to fulfill retail customer orders, US Bankruptcy Judge David Jones in New York approved Revlon's proposed bankruptcy loan on an interim basis.
According to Revlon Chief Restructuring Officer Robert Caruso, most of Revlon's raw material vendors have stopped sending shipments and many are demanding payment of past debts or deposits on future deliveries.
Without access to raw materials, Revlon cannot meet sales demands, leaving the company with dwindling cash to solve its supply problem, Caruso added. The company is currently able to fill 70% of customer orders without backlog or cancellations, compared to an industry standard of 90% to 95%, Caruso said.
In a worst-case scenario, Revlon could also face impacts into 2023, since retailers are going to be making long-term decisions in September about which products to stock, Caruso said.
"That will play a big role in how customers think about resetting store shelves for next year," Caruso said in court. "If we are not able to get the money in and restore our supply chain and meet our customer orders, we will have a lot of harm to the business.”
Revlon will retain about $300 million of the initial bankruptcy loan for day-to-day business purposes, and use $75 million to pay down debts at foreign subsidiaries that are not part of the US bankruptcy, Caruso said.