Revlon's board proposed preferred stock

NEW YORK Revlon's board has received a proposal from MacAndrews & Forbes Holding, the holder of about 75% of the combined voting power of Revlon, to issue new preferred stock in exchange for publicly held Class A common stock.

The stock would have an aggregate liquidation preference of $75 million (or about $3.74 per share). The preferred stock would pay an annual cash dividend of 12.5%, payable quarterly, and would be redeemed four years from its date of issuance at the liquidation preference, plus accrued and unpaid dividends.

While MacAndrews & Forbes has stated in its proposal that it has no present intention of disposing of its equity stake in the beauty company, in the event of a sale of the company within two years of issuance of the preferred stock, the stock would be entitled to participate with the common stock to a limited extent. In the event that no such transaction occurs, the holder of each share of preferred stock would be entitled to receive an additional payment of $1 per share two years after issuance of the preferred stock.

In connection with the transaction, MacAndrews & Forbes plan to contribute to Revlon $75 million of the $107 million senior subordinated term loan that is due to it from Revlon's wholly-owned subsidiary, Revlon Consumer Products, and to amend the term loan to extend its maturity to 2013 and to increase its interest rate to 12.5%.