AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 14, 2000
REGISTRATION NO. 333-
-------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
REV HOLDINGS INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
DELAWARE 2844 13-3933701
<S> <C> <C>
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
625 MADISON AVENUE
NEW YORK, NEW YORK 10022
(212) 527-4000
(Address, Including Zip Code and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
REV GUARANTOR CORP.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
DELAWARE 2844 APPLIED FOR
<S> <C> <C>
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
625 MADISON AVENUE
NEW YORK, NEW YORK 10022
(212) 527-4000
(Address, Including Zip Code and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
BARRY F. SCHWARTZ, ESQ.
35 EAST 62ND STREET
NEW YORK, NEW YORK 10021
(212) 572-8600
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
Copy to:
STACY J. KANTER, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
FOUR TIMES SQUARE
NEW YORK, NEW YORK 10036
(212) 735-3000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES
TO THE PUBLIC: As soon as practicable after the effective date of this
registration statement.
If the securities being registered on this form are being offered
in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box: [ ]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SECURITY OFFERING PRICE FEE (1)
================================= ============== =============== ================ ================
<S> <C> <C> <C> <C>
12% Senior Secured Notes due 2004 $139,963,000 100% $139,963,000 $36,950.23
of REV Holdings Inc.
Non-recourse Guarantee of Senior
Secured Notes due 2004 of REV
Guarantor Corp. (2)
Total $139,963,000 100% $139,963,000 $36,950.23
</TABLE>
(1) Estimated solely for the purposes of calculating the registration
fee in accordance with Rule 457(f) under the Securities Act of
1933, as amended (the "Securities Act").
(2) Pursuant to Rule 457(n) under the Securities Act, no separate fee
is payable with respect to the guarantee of the notes being
registered.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANTS SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
THE INFORMATION CONTAINED IN THIS DOCUMENT IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
DOCUMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING
AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS
NOT PERMITTED.
SUBJECT TO COMPLETION DATED DECEMBER 14, 2000
PROSPECTUS [Revlon LOGO]
REV HOLDINGS INC.
OFFER TO EXCHANGE SENIOR SECURED DISCOUNT NOTES DUE 2001 FOR
12% SENIOR SECURED NOTES DUE , 2004
-----------------
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , UNLESS EXTENDED.
----------------
TERMS OF THE EXCHANGE OFFER:
- We will issue up to $ aggregate principal amount of new notes.
- We will exchange all outstanding notes that are validly tendered and
not withdrawn prior to the expiration of the exchange offer.
- You may withdraw tendered outstanding notes at any time prior to the
expiration of the exchange offer.
- The exchange offer is the initial public offering of the new notes.
- We will not receive any proceeds from the exchange offer.
- There is no existing market for the notes to be issued, and we do not
intend to apply for their listing on any securities exchange.
The New Notes:
- Maturity Date:
, 2004
- Interest Rate:
12% per year, payable semi-annually on , and of each
year, beginning , 2001.
- Collateral:
The new notes will be secured by 52 shares of Revlon, Inc. common stock
per $1,000 principal amount of notes as compared to approximately 26
shares of Revlon, Inc. common stock per $1,000 principal amount at
maturity of notes that currently collateralize the old notes.
Initially, the collateral will be held by REV Guarantor Corp. which
will provide a non-recourse guaranty to the holders of the new notes.
Following the merger of REV Guarantor Corp. with and into REV Holdings,
the new notes will be secured by a direct pledge from REV Holdings.
- Guaranty:
The new notes will be guaranteed on a non-recourse basis by REV
Guarantor Corp., a newly formed subsidiary of REV Holdings. Once the
indenture relating to the old notes is no longer in effect, REV
Guarantor Corp. will be merged with and into REV Holdings.
SEE THE SECTION ENTITLED "RISK FACTORS" THAT BEGINS ON PAGE 15 FOR
A DISCUSSION OF THE RISKS THAT YOU SHOULD CONSIDER PRIOR TO TENDERING YOUR
OUTSTANDING NOTES FOR EXCHANGE.
----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES AND EXCHANGE COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR THE ACCURACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is , 2000.
WHERE YOU CAN FIND MORE INFORMATION
REV Holdings is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In
accordance with the Exchange Act, we file reports and other information
with the Securities and Exchange Commission. Such reports and other
information can be read and copies obtained at the SEC's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's
regional offices located at 7 World Trade Center, 13th Floor, New York, New
York 10048, and Suite 1400, Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-0330 for
further information on the Public Reference Room. The SEC maintains an
internet site at http://www.sec.gov that contains reports and information
statements and other information regarding issuers that file electronically
with the SEC, including REV Holdings.
We have filed with the SEC a registration statement on Form S-4
(together with all amendments and exhibits, the "Registration Statement")
under the Securities Act with respect to our offering of new notes. This
prospectus does not contain all of the information in the Registration
Statement. You will find additional information about us and the new notes
in the Registration Statement. Any statements made in this prospectus
concerning the provisions of legal documents are not necessarily complete
and you should read the documents which are filed as exhibits to the
Registration Statement or otherwise filed with the SEC.
This prospectus is accompanied by a copy of our latest Annual
Report on Form 10-K for the period ended December 31, 1999, and our
Quarterly Report on Form 10-Q for the quarterly period ended September 30,
2000, which contain additional information about us.
In the event that we are not required to comply with the reporting
requirements of the Exchange Act, we will be required under the indenture
for the new notes to continue to file with the SEC, and to furnish the
holders of the new notes with, the information, documents and other reports
specified in Sections 13 and 15(d) of the Exchange Act.
INCORPORATION OF DOCUMENTS BY REFERENCE
This prospectus incorporates documents, including important
business and financial information, by reference that are not part of this
prospectus or delivered with this prospectus. This means that we are
disclosing important information to you by referring you to those
documents. You should be aware that information in a document incorporated
by reference may have been modified or superseded by information that is
included in other documents that were filed at a later date and which are
also incorporated by reference or included in this prospectus.
REV Holdings has filed the following documents with the SEC and
they are incorporated herein by reference:
- Annual Report on Form 10-K for the year ended December 31,
1999; and
- Quarterly Reports on Form 10-Q for the quarterly periods
ended March 31, 2000, June 30, 2000 and September 30, 2000.
All documents and reports filed by REV Holdings with the SEC after
the date of this prospectus and before the termination of the offering of
the new notes shall be deemed incorporated herein by reference and shall be
deemed to be a part hereof from the date of filing of such documents and
reports. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained herein or in any subsequently filed document or report that also
is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part of this prospectus.
We will provide without charge, upon written or oral request, to
each person to whom a copy of this prospectus is delivered, a copy of any
of the documents of REV Holdings (other than exhibits to such documents
unless such exhibits are specifically incorporated by reference)
incorporated by reference herein.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve
risks and uncertainties. Actual results may differ materially from those
discussed in such forward-looking statements. Statements that are not
historical facts, including statements about our beliefs and expectations,
are forward-looking statements. Forward-looking statements can be
identified by, among other things, the use of forward-looking language,
such as "believes," "expects," "estimates," "may," "will," "should,"
"seeks," "plans," "scheduled to," "anticipates" or "intends" or the
negative of those terms, or other variations of those terms or comparable
language, or by discussions of strategy or intentions. Forward-looking
statements speak only as of the date they are made, and REV Holdings
undertakes no obligation to update them.
PROSPECTUS SUMMARY
The following summary highlights selected information from this
prospectus and may not contain all of the information that is important to
you. This prospectus includes the basic terms of the notes we are offering,
as well as information regarding our business and detailed financial data.
We encourage you to read this prospectus in its entirety. Unless the
context otherwise requires, references in this prospectus to "we", "our",
"ours" and "us" refer to REV Holdings and its subsidiaries, including
Revlon, Inc. , references to "REV Holdings" refer to REV Holdings Inc. and
references to "REV Guarantor" refer to REV Guarantor Corp.
ABOUT REV HOLDINGS
REV Holdings is a holding company whose only material asset is
11,250,000 shares of Revlon, Inc. Class A Common Stock (the "Class A Common
Stock") and all of the outstanding 31,250,000 shares of Revlon, Inc. Class
B Common Stock (the "Class B Common Stock" and, together with the Class A
Common Stock, the "Common Stock") (representing approximately 83% of the
outstanding shares of Revlon, Inc. Common Stock, which together have
approximately 97.3% of the combined voting power of the outstanding shares
of Revlon, Inc. Common Stock). REV Holdings is indirectly wholly-owned by
MacAndrews & Forbes Holdings Inc. ("MacAndrews Holdings"), a corporation
wholly-owned through Mafco Holdings Inc. ("Mafco Holdings" and, together
with MacAndrews Holdings, "MacAndrews & Forbes") by Ronald O. Perelman.
Effective August 5, 1997, Revlon Worldwide Corporation was merged
(the "Revlon Worldwide Merger") with and into Revlon Worldwide (Parent)
Corporation ("Revlon Worldwide (Parent)"), with Revlon Worldwide (Parent)
surviving the Revlon Worldwide Merger and subsequently changing its name to
REV Holdings Inc.
REV Holdings' principal executive offices are located at 625
Madison Avenue, New York, New York 10022 and its telephone number is (212)
527-4000.
ABOUT REVLON, INC.
Revlon, Inc. conducts its business exclusively through its direct
subsidiary, Revlon Consumer Products Corporation and its subsidiaries
("Products Corporation"). Revlon, Inc. manufactures, markets and sells an
extensive array of cosmetics and skin care, fragrances and personal care
products. REVLON is one of the world's best known names in cosmetics and is
a leading mass market cosmetics brand. Revlon, Inc. believes that its
global brand name recognition, product quality and marketing experience
have enabled it to create one of the strongest consumer brand franchises in
the world. Revlon, Inc.'s products are marketed under such well-known brand
names as REVLON, COLORSTAY, REVLON AGE DEFYING, ALMAY and ULTIMA II in
cosmetics; MOON DROPS, ETERNA 27, ULTIMA II and JEANNE GATINEAU in skin
care; CHARLIE in fragrances; and FLEX, OUTRAGEOUS, MITCHUM, COLORSTAY,
COLORSILK, and JEAN NATE, in personal care products. To further strengthen
its consumer brand franchises, Revlon, Inc. seeks to market each core brand
with a distinct and uniform global image, including packaging and
advertising, while retaining the flexibility to tailor products to local
and regional preferences.
Revlon, Inc. was founded by Charles Revson, who revolutionized the
cosmetics industry by introducing nail enamels matched to lipsticks in
fashion colors over 65 years ago. Today, Revlon, Inc. has leading market
positions in many of its principal product categories in the United States
mass market distribution channel.
There have been a number of significant developments with respect
to the business and operations of Revlon, Inc. and its operating
subsidiary, Products Corporation, during the year 2000.
Asset Dispositions. In the first half of 2000, Products Corporation
disposed of its worldwide professional products line and its non core
Plusbelle brand in Argentina using a portion of the net proceeds to reduce
the aggregate commitment under Product Corporation's Credit Agreement.
New Management Team. Revlon, Inc. formed a new management team led
by Jeffrey M. Nugent, President and Chief Executive Officer and Douglas
Greeff, Executive Vice President and Chief Financial Officer.
New United States Trade Program. Products Corporation introduced an
innovative new trade program with its domestic retail customers intended to
increase consumer sell-through of its products; reduce merchandise returns
and reduce claims for damages, among other things. The new program
includes,
o a planned roll out of a new wall display system,
o incentives to retailers to encourage more efficient ordering
and lowering return rates including setting targets for
returns and rewarding retailers whose actual returns fall
below the targets,
o establishing a flat off-invoice allowance for damages
eliminating expensive handling of damaged returns,
o a new approach to discontinuing stock keeping units (SKUs)
including providing retailers with advance notice,
allowances encouraging sell-through of the discontinued SKUs
and then limiting returns credits, and
o providing cooperative allowances and market development
funds based upon consumer sell- through (rather than sales
to retailers as in the past).
New Product Development Process. Products Corporation has
undertaken and is in the process of improving its new product development
process.
Operating Efficiencies and Manufacturing Restructure Plans.
Products Corporation announced significant manufacturing consolidations
intended to substantially reduce costs and increase efficiencies including,
o the planned consolidation of its North American cosmetics
manufacturing at its Oxford, North Carolina facility
including the shutdown of its manufacturing facility in
Canada and the planned shutdown of its Phoenix, Arizona
facility, and
o the shutdown of its manufacturing facility in New Zealand.
Advertising and Brand Image. Products Corporation historically used
its in house advertising division to create and execute its advertising. As
part of a change in its overall advertising strategy, Products Corporation
has retained outside agencies to develop advertising campaigns on a number
of key new product launches and to reposition its Ultima II brand. Products
Corporation currently intends to seek competitive bids from outside
agencies for development of advertising campaigns for some or all of its
Revlon and Almay products.
Reductions in Administrative Expense. Products Corporation has
undertaken and is in the process of implementing substantial reductions in
its administrative expense principally through reductions in its overall
employee headcount in order to redirect savings toward its other strategic
priorities including new product development, revitalization of the Revlon
brand and revitalization of its advertising campaigns.
Revlon, Inc.'s principal executive offices are located at 625
Madison Avenue, New York, New York 10022 and its telephone number is (212)
527-4000.
THE EXCHANGE OFFER
BACKGROUND. The purpose of this exchange offer is to exchange all
of the outstanding old notes, other than notes held by affiliates of REV
Holdings, for new notes. You should read the discussion under the headings
"The Exchange Offer" and "Description of New Notes" for further information
regarding the notes to be issued in the exchange offer.
The old notes were issued on March 5, 1997 by Revlon Worldwide
(Parent). REV Holdings currently has outstanding old notes in the aggregate
principal amount at maturity of $770.0 million. Approximately $630 million
principal amount at maturity of the old notes are currently held by an
affiliate of REV Holdings. Affiliates of REV Holdings may continue to
acquire old notes in privately negotiated or open market purchases. REV
Holdings has no business operations of its own and REV Holdings has no cash
available to pay the principal amount at maturity of the old notes on March
15, 2001. REV Holdings currently anticipates that, if any of the old notes
remain outstanding following consummation of the exchange offer, unless it
receives capital contributions or loans from one or more of its affiliates,
it will not have any cash available to pay the principal amount at maturity
of the old notes. However, none of the affiliates of REV Holdings,
including MacAndrews & Forbes, are required to make any capital
contributions, loans or other payments to REV Holdings with respect to REV
Holdings' obligations on the old notes and therefore we cannot assure you
that REV Holdings will receive any such payments prior to March 15, 2001.
If REV Holdings is unable to repay the old notes at maturity, it will be an
event of default under both the old notes and the new notes which could
result in the new notes becoming immediately due and payable. In this
event, with insufficient assets to repay either the old notes or the new
notes, holders of both the old notes and the new notes would be able to
attempt to realize on their collateral. In such case, each new note would
be secured by a greater amount of collateral than each old note. We have
been advised by our affiliate that holds old notes that, if all of the old
notes, other than old notes held by our affiliate, are tendered in the
exchange offer, such affiliate would contribute the old notes held by it to
us prior to the maturity of the old notes. In such case, we would be able
to cancel these old notes and discharge the indenture relating to the old
notes. Accordingly, we believe that it is important that you tender your
old notes in the exchange offer.
In addition, although REV Holdings would be entitled to receive
dividends and distributions with respect to its ownership interest in
Revlon, Inc. if any were paid, Revlon, Inc. does not currently declare
dividends and Revlon, Inc. has no obligation nor any compelling business
reason to declare any dividends or make any such distributions. In
addition, Revlon, Inc. is itself a holding company that is dependent on
dividends and distributions from its operating subsidiary, Products
Corporation, to pay its expenses and to pay any cash dividends or
distributions on its common stock. The terms of several of the debt
instruments of Products Corporation effectively prohibit it from paying
dividends or making distributions to Revlon, Inc.
The old notes are secured by a pledge of 20,000,000 shares of
Common Stock of Revlon, Inc. (the "Old Notes Collateral"). Based on the
market value of the Class A Common Stock as of December 13, 2000, the
market value of the Old Notes Collateral was approximately $99,000,000 and,
therefore, the proceeds from the sale or sales of all of the Old Notes
Collateral would not be sufficient to satisfy the amounts due on the
outstanding old notes. The remaining 22.5 million shares of Revlon, Inc.
Common Stock owned by REV Holdings have been pledged to secure the
obligations of an affiliate and, therefore, are not currently available to
satisfy the amounts due on the old notes. It is anticipated that, in
connection with the issuance of the new notes, we will obtain the consent
of the beneficiaries of the pledge to release a portion of the Common Stock
pledged to them and, subject to the conditions to the exchange offer
described in this prospectus, upon consummation of the exchange offer these
shares will be contributed to REV Guarantor and pledged to the holders of
the new notes to secure the obligations of REV Guarantor under the
Non-Recourse Guaranty. See "Description of New Notes--Non-Recourse
Guaranty" and "The Exchange Offer--Conditions to the Exchange Offer."
NEW NOTES VERSUS OLD NOTES
The new notes differ from the old notes in the following material
ways:
o all of the new notes will mature on , 2004;
o interest on the new notes will accrue at the annual rate of
12% and will be payable semiannually on , and of
each year, beginning , 2001;
o our obligations under the new notes will be guaranteed on a
non-recourse basis by REV Guarantor;
o the Non-Recourse Guaranty and, following the Merger, the new
notes will be secured by the value of 52 shares of Class B
Common Stock of Revlon, Inc. per $1,000 principal amount of
new notes as compared to approximately 26 shares of Common
Stock of Revlon, Inc. per $1,000 principal amount at
maturity that secures each old note; and
o the new notes may be redeemed at any time at the option of
REV Holdings, in whole or in part, at par, plus accrued and
unpaid interest.
Securities Offered......... Up to $ million in principal amount of
new 12% senior secured notes due , 2004.
The Exchange Offer......... We are offering the new notes in exchange for
a like principal amount at maturity of old
notes. You may tender your outstanding notes
for exchange by following the procedures
described under the heading "The Exchange
Offer."
Tenders; Expiration Date;
Withdrawal................. The exchange offer will expire at 5:00 p.m.,
New York City time, on , unless we extend it.
You may withdraw any notes that you tender for
exchange at any time prior to . If we decide
for any reason not to accept any notes you
have tendered for exchange, those notes will
be returned to you without cost promptly after
the expiration or termination of the exchange
offer. See "The Exchange Offer -- Terms of the
Exchange Offer" for a more complete
description of the tender and withdrawal
provisions.
Certain U.S. Federal
Income Tax Consequences.... In general, if you exchange old notes for new
notes in the exchange offer, you will not
recognize gain or loss for U.S. federal income
tax purposes, subject to the discussion set
forth in the section of this Prospectus
captioned "Certain U.S. Federal Income Tax
Consequences." For a summary of material U.S.
federal income tax consequences associated
with the exchange of old notes for new notes
issued in the exchange offer and the ownership
and disposition of those new notes see
"Certain U.S. Federal Income Tax
Consequences." You should consult your own tax
advisor as to the consequences of the
exchange.
Use of Proceeds............ We will not receive any cash proceeds from the
exchange offer.
Exchange Agent............. The Bank of New York is serving as the
exchange agent (the "Exchange Agent") in
connection with this exchange offer.
Consequences of Failure to
Exchange................... REV HOLDINGS WILL NOT HAVE SUFFICIENT FUNDS TO
PAY THE PRINCIPAL AMOUNT AT MATURITY OF ANY
OLD NOTES REMAINING OUTSTANDING AFTER THE
EXCHANGE OFFER IS COMPLETED. If REV Holdings
is unable to repay the old notes at maturity
it will be an event of default under both the
old notes and the new notes which could result
in the new notes becoming immediately due and
payable. We have been advised by our affiliate
that holds old notes that, if all of the old
notes are tendered in the exchange offer, the
affiliate would contribute the old notes held
by it to us prior to the maturity of the old
notes. In that case, we would be able to
cancel all of the old notes and discharge the
indenture relating to the old notes.
Accordingly, we believe that it is important
that you tender your old notes in the exchange
offer.
If the old notes and new notes are declared
due and payable, with insufficient assets to
repay either set of notes, holders of both the
new notes and the old notes would be forced to
attempt to realize on their collateral in
order to seek repayment. However, given the
current market value of the Revlon, Inc.
Common Stock, the proceeds from the sale or
sales of all of the approximately 26 shares of
Revlon, Inc. Common Stock that secure each
$1,000 principal amount at maturity of old
notes or the 52 shares of Revlon, Inc. Common
Stock that will secure each $1,000 principal
amount of new notes would not be sufficient to
satisfy the amounts due on the outstanding old
notes and new notes, respectively.
In addition, the trading market for
outstanding old notes not exchanged in the
exchange offer is likely to be significantly
more limited than it is at present. Therefore,
if your old notes are not tendered and
accepted in the exchange offer, it may become
more difficult for you to sell or transfer
your unexchanged notes. See the section
entitled "Risk Factors" for a detailed
discussion of the risks associated with the
failure to tender outstanding old notes for
exchange.
SUMMARY DESCRIPTION OF THE NEW NOTES
Securities Offered......... 12% senior secured notes due 2004 of REV Holdings.
Maturity................... The maturity date for the new notes is , 2004.
Interest Rate ............. 12% per year.
Interest Payment Dates..... Interest on the new notes will be payable
semi-annually on and
of each year, beginning on , 2001.
Ranking.................... The new notes are senior debt. They are equal
in right of payment with any existing or
future unsecured indebtedness, including trade
payables, but will rank senior to any future
indebtedness that expressly provides that it
is subordinate to the new notes.
Optional Redemption........ The new notes may be redeemed at any time at
the option of REV Holdings, in whole or in
part, at par, plus accrued and unpaid
interest.
Optional Exchange.......... Holders of outstanding old notes may opt not
to tender those notes in the exchange offer.
Therefore, it is possible that not all new
notes offered by this exchange offer will be
issued.
Non-Recourse Guaranty...... A newly formed subsidiary, REV Guarantor,
expects to guarantee on a non- recourse basis
the obligations of REV Holdings under the new
notes (the "Non- Recourse Guaranty") and to
pledge as a security therefor 52 shares of
Common Stock of Revlon, Inc. per $1,000
principal amount of new notes or an aggregate
of approximately 7,280,000 shares (assuming
that all of the old notes, other than notes
held by affiliates of REV Holdings, are
exchanged in the exchange offer). Once the
indenture relating to the old notes is no
longer in effect, REV Guarantor will be merged
(the "Merger") with and into REV Holdings and
the shares of Revlon, Inc. Common Stock that
had been pledged to secure the Non- Recourse
Guaranty will be pledged to secure the new
notes directly.
Collateral................. The Non-Recourse Guaranty and, following the
Merger, the new notes will be secured by the
value of 52 shares of Class B Common Stock of
Revlon, Inc. per $1,000 principal amount of
new notes as compared to approximately 26
shares of Common Stock of Revlon, Inc. per
$1,000 principal amount at maturity that
secures each old note. At our option, we are
permitted, subject to certain restrictions, to
substitute Class A Common Stock for the Class
B Common Stock that is pledged to secure the
new notes. See "Description of New Notes -
Collateral." We are also permitted, subject to
certain restrictions, to substitute cash or
U.S. government securities for all or a
portion of the Class B Common Stock that is
pledged to secure the new notes.
Keepwell Agreement......... GSB Investments Corp., an affiliate of REV
Holdings, will enter into an agreement with
REV Holdings (the "Keepwell Agreement")
pursuant to which GSB Investments Corp. will
agree to provide REV Holdings with the funds
in an amount equal to any interest payments
due on the new notes, to the extent that REV
Holdings does not have sufficient funds on
hand to make such payments on the applicable
due dates. The Keepwell Agreement is not a
guarantee of the payment of interest on the
new notes. The obligations of GSB Investments
Corp. under the Keepwell Agreement are only
enforceable by REV Holdings and may not be
enforced by holders of the new notes or by the
indenture trustee.
As of October 31, 2000, GSB Investments Corp.
owned an aggregate of 42,949,525 shares, or
approximately 32%, of the common stock of
Golden State Bancorp Inc. ("GSB"), a New York
Stock Exchange listed company that is the
indirect parent of California Federal Bank, a
federal savings bank. At December 13, 2000,
the last reported sale price of GSB common
stock on the NYSE was $27 7/16 per share.
Commencing in the second quarter of 2000, GSB
has paid a quarterly dividend of $0.10 per
share.
Covenants.................. We will issue the notes being offered in the
exchange offer under an indenture (the
"Indenture") with , as trustee (the
"Trustee"). The Indenture, contains certain
covenants that, among other things, limit our
ability to:
- incur additional debt;
- issue preferred stock;
- enter into transactions with affiliates;
- create liens; and - sell assets or
subsidiary stock.
These covenants are subject to a number of
important limitations and exceptions.
See the section "Description of New Notes"
under the heading "Covenants" for a more
comprehensive description of the covenants
contained in the Indenture.
RISK FACTORS
See "Risk Factors" beginning on page 15 for a discussion of factors
that should be considered by holders of outstanding notes before tendering
their outstanding notes in the exchange offer.
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The summary historical financial data for each of the years in the
five-year period ended December 31, 1999 has been derived from our audited
consolidated financial statements. The summary historical financial data
for the nine months ended September 30, 2000 and 1999 and as of September
30, 2000 have been derived from our unaudited consolidated financial
statements which reflect, in the opinion of our management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial data for such periods. Results for interim periods are
not necessarily indicative of the results for the full year. In connection
with the exchange offer, old notes held by nonaffiliates may be exchanged
for new notes with a like principal amount at maturity . Pursuant to
Emerging Issues Task Force Issue 96-19, Debtor's Accounting for a
Modification or Exchange of Debt Instruments, we believe that the terms of
the new notes are not substantially different from those of the old notes.
Accordingly, the carrying amount of the old notes at the time of the
exchange will remain unchanged and a new effective interest rate will be
determined based upon the cash flow requirements of the new notes.
Remaining debt issuance costs will be amortized over the period from the
date of the exchange through the maturity date of the new notes. Any
amounts paid to third parties, other than the creditors, relating to the
exchange will be expensed as incurred. The pro forma Statement of
Operations data for the year ended December 31, 1999 and the nine months
ended September 30, 2000 give pro forma effect to the consummation of the
exchange offer (assuming all of the old notes not held by an affiliate are
exchanged) and the contribution of the old notes held by an affiliate to
the capital of REV Holdings assuming such transactions occurred on January
1, 1999. The pro forma Balance Sheet data as of September 30, 2000 give pro
forma effect to the consummation of the exchange offer (assuming all of the
old notes not held by an affiliate are exchanged) and the contribution of
the old notes held by an affiliate to the capital of REV Holdings assuming
such transactions occurred on September 30, 2000. The pro forma adjustments
are based upon available information and certain assumptions that
management of REV Holdings believes are reasonable. The pro forma financial
data do not purport to represent the results of operations or the financial
position of REV Holdings that actually would have occurred had the
foregoing transactions been consummated on the aforesaid dates.
You also should read "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the consolidated financial
statements and related notes, the report of our independent auditors
included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, incorporated in this prospectus by reference and
attached as Annex A, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the consolidated financial statements
and related notes included in our Quarterly Report on Form 10-Q for the
quarter ended September 30, 2000, incorporated in this prospectus by
reference and attached as Annex B.
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
(DOLLARS IN MILLIONS) (DOLLARS IN MILLIONS)
-------------------- --------------------------------------------------------
HISTORICAL STATEMENT OF OPERATIONS
<S> <C> <C> <C> <C> <C> <C> <C>
DATA (a): 2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
Net sales....................... $1,170.5 $1,446.9 $1,861.3 $2,252.2 $2,238.6 $2,092.1 $1,867.3
Gross profit.................... 753.0 936.3 1,175.2 1,486.5 1,495.5 1,403.2 1,252.4
Selling, general and
administrative expenses..... 686.6 1,001.0 1,347.6 1,328.8 1,277.0 1,204.0 1,104.9
Restructuring costs
and other, net.............. 28.3(b) 22.1(c) 40.2(c) 33.1(d) 3.6(e) -- --
---------- --------- ---------- ---------- ---------- --------- ---------
Operating income (loss)......... 38.1 (86.8) (212.6) 124.6 214.9 199.2 147.5
Interest expense, net........... 162.7 156.5 212.6 197.6 212.5 235.7 230.5
Amortization of debt issuance
costs....................... 7.2 6.0 7.9 9.0 11.6 12.5 15.2
Gain on sale of subsidiary stock (1.1) (0.1) (0.1) (2.6) (0.3) (187.8)(f) --
Other, net...................... (2.0) 0.4 0.4 9.1 11.9 12.1 12.7
---------- --------- ---------- ---------- ---------- --------- ---------
(Loss) income from continuing
operations before income
taxes....................... (128.7) (249.6) (433.4) (88.5) (20.8) 126.7 (110.9)
Provision for income taxes...... 7.0 5.6 9.1 5.0 9.3 25.5 25.4
---------- --------- ---------- ---------- ---------- --------- ---------
(Loss) income from continuing
operations.................. (135.7) (255.2) (442.5) (93.5) (30.1) 101.2 (136.3)
(Loss) income from discontinued
operations.................. -- -- -- (64.2) 0.7 0.4 (4.0)
Extraordinary items- early
extinguishments of debt..... -- -- -- (51.7) (58.7) (6.6) --
---------- --------- ---------- ---------- ---------- --------- ---------
Net (loss) income............... $(135.7) $(255.2) $(442.5) $(209.4) $(88.1) $95.0 $(140.3)
========== ========= ========== ========== ========== ========== =========
OTHER DATA:
Net cash (used for) provided by
operating activities $(131.9) $(90.8) $(82.8) $(51.5) $10.2 $(10.4) $(45.9)
Net cash provided by (used for)
investing activities 325.2 (29.8) (40.7) 246.4 (403.9) (61.8) (69.5)
Net cash (used for) provided by
financing activities (193.2) 187.0 118.5 (178.3) 403.0 78.0 125.6
Ratio of earnings to fixed
charges (g)................. -- -- -- -- -- 1.5x --
EBITDA (h)...................... $151.5 $22.9 $(50.6) $263.9 $311.6 $279.6 $222.9
Ratio of EBITDA to interest
expense, net................ 0.9x 0.1x -- 1.3x 1.5x 1.2x 1.0x
PRO FORMA STATEMENT OF OPERATIONS
DATA (I):
Operating income (loss)......... $38.1 $(212.6)
Interest expense, net........... 117.4 158.4
Amortization of debt issuance costs 4.7 4.6
Loss from continuing operations. (87.9) (385.0)
Ratio of earnings to fixed
charges (j)................. -- --
EBITDA $151.5 $(50.6)
Ratio of EBITDA to
interest expense, net....... 1.3x --
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA: SEPTEMBER 30, 2000
(DOLLARS IN MILLIONS)
----------------------
PRO
ACTUAL FORMA (K)
---------- -----------
<S> <C> <C>
Total assets.................... $1,130.8 $1,129.3
Long-term debt (including
current portion)................ 2,311.3 1,710.7
Total stockholder's deficiency.. (1,794.1) (1,198.1)
------------------------------------------------------------------------------------------------------------
See accompanying notes to Summary Financial Data
</TABLE>
NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(a) On March 30, 2000 and on May 8, 2000, Products Corporation
completed the disposition of its worldwide professional products
line and its Plusbelle brand in Argentina, respectively.
Accordingly, the summary historical and pro forma financial data
include the results of operations of the professional products line
and Plusbelle brand through the dates of their respective
dispositions.
(b) In the first six months of 2000, we recorded a charge of $14.6
million relating to a restructuring plan that began in the fourth
quarter of 1999, principally for additional employee severance and
other personnel benefits and to restructure certain operations
outside the United States including exiting certain operations in
Japan.
During the third quarter of 2000, we continued to re-evaluate our
organizational structure. As part of this re-evaluation, we are
developing a new restructuring plan designed to improve
profitability by reducing personnel and consolidating manufacturing
facilities. In the third quarter of 2000, we recorded a charge of
$13.7 million related to such plan, principally for additional
employee severance and other personnel benefits and to consolidate
worldwide operations.
(c) In the first nine months of 1999, we continued to implement a
restructuring plan established in the fourth quarter of 1998
referred to below for which we recorded a charge of $20.5 million
for employee severance and other personnel benefits, costs
associated with the exit from leased facilities as well as other
costs. Also in 1999, we consummated an exit from a non-core
business, resulting in a charge of $1.6 million.
During the fourth quarter of 1999, we continued to re-evaluate our
organizational structure and implemented a new restructuring plan
principally at our New York headquarters and New Jersey locations
resulting in a charge of $18.1 million principally for employee
severance. As part of this restructuring plan, we reduced personnel
and consolidated excess leased real estate.
(d) In the fourth quarter of 1998, we committed to a restructuring plan
to realign and reduce personnel, exit excess leased real estate,
realign and consolidate regional activities, reconfigure certain
manufacturing operations and exit certain product lines and
recognized a net charge of $42.9 million, which includes $2.7
million charged to cost of sales. In the third quarter of 1998, we
recognized a gain of approximately $7.1 million for the sale of the
wigs and hairpieces portion of our business in the United States.
(e) In 1997, we incurred restructuring costs of $20.6 million in
connection with the implementation of our business strategy to
rationalize factory operations. These costs primarily included
severance and other costs related to the rationalization of certain
factory and warehouse operations worldwide. Such costs were
partially offset by an approximately $12.7 million settlement of a
claim and related gains of approximately $4.3 million on the sales
of certain factory operations outside the United States.
(f) Represents the gain on the sale of subsidiary stock recognized as a
result of Revlon, Inc.'s initial public offering on March 5, 1996.
(g) Earnings used in computing the ratio of earnings to fixed charges
consist of (loss) income from continuing operations before income
taxes plus fixed charges. Fixed charges consist of interest expense
(including amortization of debt issuance costs, but not losses
relating to the early extinguishment of debt) and 33% of rental
expense (considered to be representative of the interest factor).
Fixed charges exceeded earnings before fixed charges by $128.7
million for the nine months ended September 30, 2000, $249.6
million for the nine months ended September 30, 1999, $433.4
million in 1999, $88.5 million in 1998, $20.8 million in 1997 and
$110.9 million in 1995.
(h) EBITDA is defined as operating income (loss) before restructuring
costs and other, net, plus depreciation and amortization other than
that relating to early extinguishment of debt, debt discount and
debt issuance costs. EBITDA is presented here not as a measure of
operating results but rather as a measure of debt service ability.
EBITDA should not be considered in isolation or as a substitute for
net income or cash flow from operations prepared in accordance with
generally accepted accounting principles as a measure of our
profitability or liquidity. EBITDA does not take into account our
debt service requirements and other commitments and, accordingly,
is not necessarily indicative of amounts that may be available for
discretionary uses.
(i) The pro forma statement of operations data reflect (i) the
elimination of interest expense and the decrease in amortization of
debt issuance costs related to the old notes (as a result of
amortizing debt issuance costs related to old notes exchanged in
the offer through the maturity date of the new notes) of $67.5
million and $3.3 million for the year ended December 31, 1999,
respectively, and $55.3 million and $2.5 million for the nine
months ended September 30, 2000, respectively and (ii) interest
expense of $13.3 million and $10.0 million for the year ended
December 31, 1999 and September 30, 2000, respectively, on the
carrying value of the new notes of $111.1 million (balance
outstanding on January 1, 1999) based on an effective interest rate
of approximately 12%. Such pro forma results do not include a
nonrecurring charge of $3.1 million for fees and expenses related
to the exchange offer expected to be paid to third parties.
(j) As adjusted to reflect the exchange offer and the contribution of
the old notes held by our affiliate to our capital as if such
transactions occurred on January 1, 1999, fixed charges would have
exceeded earnings before fixed charges by $80.9 million for the
nine months ended September 30, 2000 and $375.9 million for the
year ended December 31, 1999.
(k) The pro forma balance sheet data reflect (i) the retirement of
$133.4 million accreted value of old notes in the exchange offer
(ii) the issuance of new notes in the exchange offer of $133.4
million (the accreted value as of September 30, 2000 of the old
notes held by nonaffiliates) (iii) the charge to capital of $599.1
million reflecting the contribution of the old notes held by our
affiliate as of December 11, 2000 to our capital (accreted value of
$600.6 million as of September 30, 2000) net of the related debt
issuance costs of $1.5 million and (iv) the charge to retained
earnings and increase in long-term liabilities reflecting $3.1
million of the estimated fees and expenses related to the exchange
offer payable to our affiliate.
RISK FACTORS
You should consider carefully the following risks and all of the
information set forth in this prospectus before tendering your notes for
exchange in the exchange offer. The risk factors set forth below, other
than those that discuss the consequences of failing to exchange your
outstanding notes in the exchange offer, are generally applicable to both
the outstanding notes and the notes issued in the exchange offer.
CONSEQUENCES OF FAILURE TO EXCHANGE
REV Holdings will not have sufficient funds to pay the principal
amount at maturity of any old notes remaining outstanding after the
exchange offer is completed if any of the old notes remain outstanding
following consummation of the exchange offer. In addition, the trading
market for outstanding old notes not exchanged in the exchange offer is
likely to be significantly more limited than it is at present. Therefore,
if your old notes are not tendered and accepted in the exchange offer, it
may become more difficult for you to sell or transfer your unexchanged
notes.
Ability to Pay Principal Amount at Maturity of The Old Notes
REV Holdings has no business operations of its own and REV Holdings
has no cash available to pay the principal amount at maturity of the old
notes on March 15, 2001. REV Holdings currently anticipates that, if any of
the old notes remain outstanding following consummation of the exchange
offer, unless it receives capital contributions or loans from one or more
of its affiliates, it will not have any cash available to pay the principal
amount at maturity of the old notes and it will default on the repayment of
the principal of the old notes. None of the affiliates of REV Holdings,
including MacAndrews & Forbes, are required to make any capital
contributions, loans or other payments to REV Holdings with respect to REV
Holdings' obligations on the old notes and therefore we cannot assure you
that REV Holdings will receive any such payments prior to March 15, 2001.
In addition, although REV Holdings would be entitled to receive
dividends and distributions with respect to its ownership interest in
Revlon, Inc. if any were paid, Revlon, Inc. does not currently declare
dividends and Revlon, Inc. has no obligation nor any compelling business
reason to declare any dividends or make any such distributions. In
addition, Revlon, Inc. is itself a holding company that is dependent on
dividends and distributions from its operating subsidiary, Products
Corporation, to pay its expenses and to pay any cash dividends or
distributions on its common stock. The terms of several of the debt
instruments of Products Corporation effectively prohibit it from paying
dividends or making distributions to Revlon, Inc. Accordingly, REV Holdings
does not anticipate that it will receive any distributions from Revlon,
Inc. prior to the maturity of the old notes or have any cash available to
pay the principal amount at maturity of the old notes on March 15, 2001.
Without sufficient funds to pay the principal amount at maturity of
the old notes, REV Holdings may be forced to seek, or may be forced into,
protection under Chapter 11 of the United States Bankruptcy Code. The
expenses of any such proceeding would reduce the assets available for
payment or distribution to REV Holdings' creditors, including the holders
of the old notes and the new notes. In addition, REV Holdings believes that
the filing by it or against it of a petition under Chapter 11 of the
Bankruptcy Code would not increase the amount of any payment or
distribution that holders of the old notes would receive, could reduce such
amount, and in any event would delay receipt of any payment or distribution
by such holders.
Inadequacy of Collateral
Although the old notes are secured by a pledge of 20,000,000 shares
of Common Stock of Revlon, Inc., based on the market value of the Class A
Common Stock as of December 13, 2000, the market value of the Old Notes
Collateral was approximately $99,000,000 or approximately $128.57 for each
$1,000 principal amount at maturity of the old notes and, therefore, the
proceeds from the sale or sales of all of the Old Notes Collateral would
not be sufficient to satisfy the amounts due on the outstanding old notes.
In addition, the ability of the holders of the old notes to realize upon
the Old Notes Collateral is subject to certain limitations and there can be
no assurance that the trustee under the indenture relating to the old notes
or the holders of the old notes would be able to sell the shares pledged as
Old Notes Collateral or if they do sell, that they would be able to sell
the shares pledged as Old Notes Collateral at the then current market
price. Sales of substantial amounts of Revlon, Inc. Common Stock could
adversely affect market prices.
The shares of Common Stock of Revlon, Inc. that are not pledged to
secure the old notes and the new notes have been pledged to secure the
obligations of an affiliate. If the lenders to which such remaining shares
of common stock of Revlon, Inc. are pledged were to foreclose upon the
common stock of Revlon, Inc. such foreclosure could, under certain
circumstances, constitute a change of control under certain debt
instruments of Products Corporation. A change of control would result in an
event of default permitting acceleration under the Credit Agreement and
would enable the holders of certain debt securities of Products Corporation
to require that Products Corporation repurchase their debt securities. We
cannot assure you that the assets of our subsidiaries would be sufficient
to repay in full borrowings under such debt instruments if they became due,
and in such event no assets of our subsidiaries would be available to the
holders of the new notes. In such event the value of the common stock of
Revlon, Inc. that is the collateral securing the new notes would be
substantially diminished or eliminated. In addition, the stock of Products
Corporation and certain of its subsidiaries is pledged to secure
indebtedness and certain guarantees under the Credit Agreement and the
stock of certain of Products Corporation's subsidiaries is also pledged to
secure other indebtedness of our subsidiaries. If creditors of our
subsidiaries were to foreclose upon the stock of Products Corporation and
its subsidiaries, the value of the common stock of Revlon, Inc. would
likewise be substantially diminished or eliminated.
Limited Trading Market
To the extent that old notes are tendered and accepted for exchange
pursuant to the exchange offer, the trading market for old notes that
remain outstanding is likely to be significantly more limited than it is at
present. A debt security with a smaller outstanding principal amount
available for trading (a smaller "float") may command a lower price than
would a comparable debt security with a larger float. Therefore, the market
price for old notes that are not tendered and accepted for exchange
pursuant to the exchange offer may be affected adversely to the extent that
the principal amount at maturity of the old notes exchanged pursuant to the
exchange offer reduces the float. A reduced float may also make the trading
price of old notes that are not exchanged in the exchange offer more
volatile.
RISKS RELATING TO THE NEW NOTES
We Have Substantial Indebtedness
We have a substantial amount of outstanding indebtedness. As of
September 30, 2000, our subsidiaries had total indebtedness of
approximately $1,603.1 million. In addition, we are currently obligated to
repay $770.0 million aggregate principal amount at maturity of the old
notes on March 15, 2001. See "Capitalization." Although the Indenture
limits our ability to borrow additional money, under certain circumstances
we are allowed to borrow a significant amount of additional money, which
would either rank equally in right of payment with the new notes or be
subordinated in right of payment to the new notes. See "Description of New
Notes--Certain Covenants." Subject to certain limitations contained in
their debt instruments, our subsidiaries may incur additional debt to
finance working capital or capital expenditures, investments or
acquisitions or for other purposes. For more information about our
indebtedness, see the"Description of New Notes" section of this prospectus.
The substantial indebtedness of our subsidiaries, including our
operating subsidiary, Products Corporation, will have important
consequences to you. For example, it will:
o require Products Corporation to dedicate a substantial
portion of its cash flow from operations to payments on its
indebtedness, thereby reducing the availability of its cash
flow for other general corporate purposes;
o limit Products Corporation's ability to fund future working
capital, capital expenditures, acquisitions, investments,
restructurings and other general corporate requirements; and
o limit Products Corporation's flexibility in responding to
changes in its business and the industry in which it
operates.
Accordingly, it is unlikely that we will receive any dividends or
distributions from our subsidiaries to help service our own substantial
indebtedness.
If any of the old notes remain outstanding following consummation
of the exchange offer, unless we receive capital contributions or loans
from one or more of our affiliates, we will not have sufficient funds to
pay the principal amount at maturity of any old notes. If we default on the
repayment of the principal of the old notes, this will result in a default
under the Indenture which could result in the new notes becoming
immediately due and payable. In this event, with insufficient assets to
repay either set of notes, holders of both the new notes and the old notes
would be able to attempt to realize on their collateral, but in such case
each new note would be secured by a greater amount of collateral than each
old note.
Ability to Pay Principal of New Notes
We currently anticipate that, in order to pay the principal amount
at maturity of the new notes or upon the occurrence of an event of default,
we will be required to adopt one or more alternatives, such as refinancing
our indebtedness, selling our equity securities or the equity securities or
assets of Revlon, Inc., or seeking capital contributions or loans from our
affiliates. None of our affiliates are required to make any capital
contributions, loans or other payments to us regarding our obligations on
the new notes other than as provided in the Keepwell Agreement with respect
to interest on the new notes. We cannot assure you that we would be able to
pay the principal amount of the new notes if we took any of the above
actions or that the Indenture or any of our other debt instruments or the
debt instruments of our subsidiaries then in effect would permit us to take
any of the above actions. See "--As a Holding Company REV Holdings Depends
on Dividends from Its Subsidiaries and Its Subsidiaries Are Subject to
Restrictions on Their Ability to Pay Dividends," "--The New Notes
Effectively Will Be Junior to Indebtedness and Liabilities of Subsidiaries"
and "--Restrictions and Covenants in Debt Agreements Limit Our Ability to
Take Certain Actions; Consequences of Failure to Comply."
As a Holding Company REV Holdings Depends on Dividends from Its Subsidiaries
and Its Subsidiaries Are Subject to Restrictions on Their Ability to Pay
Dividends
REV Holdings is a holding company with no business operations of
its own. REV Holdings' only significant asset is approximately 83% of the
shares (representing approximately 97.3% of the voting power) of Common
Stock of Revlon, Inc., through which we conduct our business operations.
Although REV Holdings would be entitled to receive dividends and
distributions with respect to its ownership interest in Revlon, Inc. if any
were paid, we currently expect that the earnings and cash flow of Revlon,
Inc. will be retained and used in the business of Revlon, Inc., including
for debt service. We anticipate that Revlon, Inc. will not generate
sufficient cash flow to pay dividends or distribute funds to us. Revlon,
Inc. is itself a holding company that is dependent on dividends and
distributions from its operating subsidiary, Products Corporation, to pay
its expenses and to pay any cash dividends or distributions on its common
stock. The terms of Product Corporation's credit agreement (the "Credit
Agreement") and several of the other debt instruments of Products
Corporation currently restrict Products Corporation from paying dividends
or making distributions, except to Revlon, Inc. under certain limited
circumstances. See "--Restrictions and Covenants in Debt Agreements Limit
Our Ability to Take Certain Actions; Consequences of Failure to Comply."
Accordingly, we do not anticipate that we will receive any distributions
from Revlon, Inc. and, therefore, our only source of cash to pay interest
on the new notes is the Keepwell Agreement.
The New Notes Effectively Will Be Junior to Indebtedness and Liabilities of
Subsidiaries
As a stockholder, rather than a creditor of our subsidiaries, our
right and the rights of our creditors to participate in the assets of any
of our subsidiaries upon any liquidation or reorganization of that
subsidiary will rank behind the claims of that subsidiary's creditors,
including trade creditors (except to the extent we have a claim as a
creditor of such subsidiary). As a result, the new notes will be
effectively subordinated to the outstanding indebtedness and other
liabilities, including trade payables, of our subsidiaries. The ability of
our creditors, including the holders of the new notes, to participate in
such assets will also be limited to the extent that the outstanding shares
of Revlon, Inc. Common Stock are not beneficially owned by us.
Ability to Service Our Debt and Meet Our Cash Requirements Depends on Many
Factors
There can be no assurance that the combination of cash flow from
operations, funds from existing credit facilities and renewals of
short-term borrowings will be sufficient to meet Products Corporation's
cash requirements on a consolidated basis. Products Corporation anticipates
that it will be seeking to amend its Credit Agreement in certain respects
in 2001 in order to fund its proposed restructuring plans and to amend
certain of the financial covenants for 2001 and 2002. If Products
Corporation is unable to satisfy its cash requirements, and amend the
Credit Agreement, it could be required to adopt one or more alternatives,
for example:
o reduce or delay capital expenditures;
o restructure its indebtedness;
o sell assets or operations;
o revise or delay its restructuring plans; or
o seek capital contributions or loans from affiliates.
We cannot assure you that Products Corporation would be able to
take any of these actions, that these actions would enable Products
Corporation to continue to satisfy its capital requirements or that these
actions would be permitted under the terms of its various debt instruments
then in effect.
We have entered into the Keepwell Agreement with GSB Investments
Corp., one of our affiliates, pursuant to which GSB Investments Corp. has
agreed to provide us with the funds in an amount equal to any interest
payments due on the new notes, to the extent that we do not have sufficient
funds on hand to make such payments on the applicable due dates. However,
the Keepwell Agreement is not a guarantee of the payment of interest on the
new notes. The obligations of GSB Investments Corp. under the Keepwell
Agreement are only enforceable by us and may not be enforced by holders of
the new notes or the Trustee. The failure of GSB Investments Corp. to make
a payment to us under the Keepwell Agreement will not be an event of
default under the Indenture. Further, the Indenture has no requirement that
we maintain the Keepwell Agreement. In addition, although we have the right
to enforce the Keepwell Agreement, we cannot assure you that GSB
Investments Corp. will have sufficient funds to make any payments to us
under the Keepwell Agreement or that it will comply with its obligations
under the Keepwell Agreement.
As of October 31, 2000, GSB Investments Corp. owned an aggregate of
42,949,525 shares, or approximately 32%, of the common stock of GSB. At
December 13, 2000, the last reported sale price of GSB common stock on the
NYSE was $27 7/16 per share. All of these shares are currently pledged to
secure obligations of GSB Investments Corp. or affiliates of GSB
Investments Corp. GSB Investments Corp. has received two quarterly
dividends of $0.10 per share, or an aggregate of $8,844,905, since GSB
commenced paying quarterly dividends in July 2000. If GSB were to continue
to pay quarterly dividends at this rate and GSB Investments Corp. were to
continue to own the same number of shares, GSB Investments Corp. would have
sufficient income from dividends paid on its GSB stock to make any payments
to us that it might be required to make under the Keepwell Agreement.
However, GSB has only paid dividends at this rate since July 2000 and there
can be no assurance that GSB will continue to pay dividends at this rate,
if at all, or that GSB Investments Corp. will continue to own its shares of
the common stock of GSB. If GSB Investments Corp. does not receive
sufficient dividend income from its GSB stock, it will be required to seek
alternative sources of funds in order to satisfy its potential obligations
under the Keepwell Agreement.
Restrictions and Covenants in Debt Agreements Limit Our Ability to Take
Certain Actions; Consequences of Failure to Comply
The Indenture and the debt agreements of our subsidiaries,
including the Credit Agreement, contain a number of significant
restrictions and covenants that limit our ability and our subsidiaries'
ability, among other things, to:
o borrow money;
o use assets as security in other transactions;
o pay dividends on stock or purchase stock;
o sell assets;
o enter into certain transactions with affiliates; and
o make certain investments or acquisitions.
In addition, the Credit Agreement further requires Products
Corporation to maintain certain financial ratios and meet certain tests,
including minimum EBITDA for 2000 and leverage ratio and minimum interest
coverage for 2001 and 2002, and restricts Product Corporation's ability and
the ability of its subsidiaries to make capital expenditures. All of the
capital stock of Products Corporation, substantially all of the non-real
property assets of Products Corporation in the United States, Products
Corporation's facility located in Phoenix, Arizona and certain limited
assets outside the United States are pledged as collateral for its
obligations under the Credit Agreement. In addition, a change of control of
Products Corporation would be an event of default under the Credit
Agreement and would give the holders of certain debt securities of Products
Corporation, the right to require the repurchase of their notes.
Events beyond Products Corporation's control, such as prevailing
economic conditions, changes in consumer preferences and changes in the
competitive environment, could impair its operating performance, which
could affect our ability and that of our subsidiaries to comply with the
terms of our debt instruments. We cannot assure you that we and our
subsidiaries will be able to comply with the provisions of our respective
debt instruments, including the financial ratios and tests in the Credit
Agreement. Breaching any of these covenants or restrictions or the failure
to comply with our obligations after the lapse of any applicable grace
periods could result in a default under the applicable debt instruments,
including the Credit Agreement. If there were an event of default holders
of such defaulted debt could cause all amounts borrowed under these
instruments to be due and payable immediately. We cannot assure you that
our assets or cash flow or that of our subsidiaries would be sufficient to
fully repay borrowings under the outstanding debt instruments, either upon
maturity or if accelerated upon an event of default or, in the case of
certain debt securities of Products Corporation, if it was required to
repurchase these securities upon a change of control, that we would be able
to refinance or restructure the payments on such debt. Further, if Products
Corporation is unable to repay, refinance or restructure its indebtedness
under the Credit Agreement, the lenders could proceed against the
collateral securing that indebtedness. In addition, any event of default or
declaration of acceleration under one debt instrument could also result in
an event of default under one or more of our or our subsidiaries' other
debt instruments. See "--We Have Substantial Indebtedness."
The Value of the Collateral May Diminish
The Non-Recourse Guaranty and, following the Merger, the new notes
will be secured by a pledge of approximately 7,280,000 shares of Class B
Common Stock of Revlon, Inc. (assuming that all of the old notes, other
than notes held by affiliates of REV Holdings, are tendered in the exchange
offer), representing approximately 14% of the outstanding shares of Common
Stock of Revlon, Inc. The Class A Common Stock of Revlon, Inc. is currently
listed on the NYSE. During the last twelve months, the high and low
reported closing prices were $11 per share and $3.72 per share,
respectively. At December 13, 2000, based on the last reported sale price
of Revlon, Inc. Class A Common Stock on the NYSE of $4.95 per share, the
market value of the collateral securing the Non- Recourse Guaranty and the
new notes would have been approximately $257 for each $1,000 principal
amount of the new notes. We cannot assure you that the proceeds from the
sale or sales of all of such collateral would be sufficient to satisfy the
amounts due on the new notes in the event of a default. In addition, the
ability of the holders of the new notes to realize upon the collateral is
subject to certain limitations and there can be no assurance that the
Trustee or the holders of the new notes would be able to sell the shares
pledged as collateral at the then current market value. Sales of
substantial amounts of the Revlon, Inc. Common Stock (whether by the
Trustee or other secured lenders or otherwise) could adversely affect
market prices. See "Description of New Notes--Collateral."
The shares of Common Stock of Revlon, Inc. that are not pledged to
secure the old notes and the new notes have been pledged to secure the
obligations of an affiliate. If the lenders to which such remaining shares
of common stock of Revlon, Inc. are pledged were to foreclose upon the
common stock of Revlon, Inc. such foreclosure could, under certain
circumstances, constitute a change of control under certain debt
instruments of Products Corporation. A change of control would result in an
event of default permitting acceleration under the Credit Agreement and
would enable the holders of certain debt securities of Products Corporation
to require that Products Corporation repurchase their debt securities. We
cannot assure you that the assets of our subsidiaries would be sufficient
to repay in full borrowings under such debt instruments if they became due,
and in such event no assets of our subsidiaries would be available to the
holders of the new notes. In such event the value of the common stock of
Revlon, Inc. that is the collateral securing the new notes would be
substantially diminished or eliminated. In addition, the stock of Products
Corporation and certain of its subsidiaries is pledged to secure
indebtedness and certain guarantees under the Credit Agreement and the
stock of certain of Products Corporation's subsidiaries is also pledged to
secure other indebtedness of our subsidiaries. If creditors of our
subsidiaries were to foreclose upon the stock of Products Corporation and
its subsidiaries, the value of the common stock of Revlon, Inc. would
likewise be substantially diminished or eliminated.
No additional shares of Revlon, Inc. Common Stock or other
collateral will be pledged irrespective of the market value of such shares
at any time. The Indenture permits us, under certain circumstances, to
grant liens on our assets, if any, other than the shares of Revlon, Inc.
pledged to secure the new notes. There can be no assurance as to the
relative values of the shares of Revlon, Inc. Common Stock pledged to
secure the new notes and the Non- Recourse Guaranty.
No Operating History under the New Business Strategy
Products Corporation is in the process of implementing material
changes in its business strategy intended to improve operating results.
There can be no assurance that the changes will be successful or that they
will have the intended results. Additionally, it is possible that the
changes may have other unanticipated consequences which could be adverse to
Products Corporation's business. The new business strategy involves a
number of significant changes including:
o new trade program with Products Corporation's domestic
retail customers; which are intended to, among others
things, increase consumer sell-through of its products,
reduce merchandise returns and reduce claims for damages;
o a change in its advertising strategy and execution by using
outside agencies to work on two significant new Revlon
product launches, and to reposition its Ultima II brand as
well as the anticipated shift to use outside agencies to
create all or substantially all of the Revlon and Almay
advertising;
o significant reductions in administrative expenses
principally by reducing staffing levels throughout the
company;
o shutdowns of manufacturing facilities that are
underutilized, consolidation of manufacturing operations and
outsourcing to third-party manufacturers; and
o improving the new product development process.
Each of the components of the new business strategy carries
significant risks as well as the possibility of unexpected consequences.
Potential risks include:
o failure of domestic customers to accept and adhere to the
new trade program;
o reductions in net sales as a result of such new trade
program;
o failure of the new trade program to result in increased
consumer sell-through, decreased returns and decreased
damage claims;
o possible increases in advertising costs and/or failure to
achieve the intended effect of the new advertising strategy;
o significant severance and other cash costs arising out of
reductions in administrative expenses;
o possible adverse effects on employee morale and loss of
needed employees;
o disruptions resulting from consolidation of manufacturing;
and
o failure of consumers to accept new product offerings.
In addition, several of Products Corporation's executive officers
joined the company in the recent past. Accordingly, there has been little
opportunity for Products Corporation to evaluate the effectiveness of its
new management team as a working unit. The failure of our senior management
to function effectively as a team may have an adverse effect on our ability
to implement the new business strategy.
Competition
The consumer products business is highly competitive. Our operating
subsidiary, Products Corporation, competes on the basis of numerous
factors. Brand recognition, product quality, performance and price, and the
extent to which consumers are educated on product benefits have a marked
influence on consumers' choices among competing products and brands.
Advertising, promotion, merchandising and packaging, and the timing of new
product introductions and line extensions also have a significant impact on
buying decisions, and the structure and quality of the sales force affect
product reception, in-store position, permanent display space and inventory
levels in retail outlets. An increase in the amount of competition that
Products Corporation faces could have a material adverse effect on its
business, financial condition and results of operations. In addition,
Products Corporation competes in selected product categories against a
number of multinational manufacturers, some of which are larger and have
substantially greater resources than it, and which may therefore have more
flexibility to respond to changing business and economic conditions than it
does.
Social, Political and Economic Risks Affecting Foreign Operations and
Effects of Foreign Currency Fluctuation
As of September 30, 2000, Products Corporation, our operating
subsidiary, had operations based in 21 foreign countries. Products
Corporation is exposed to the risk of changes in social, political and
economic conditions inherent in operating in foreign countries, including
those in Asia, Eastern Europe and Latin America. Such changes include
changes in the laws and policies that govern foreign investment in
countries where Products Corporation has operations, as well as, to a
lesser extent, changes in United States laws and regulations relating to
foreign trade and investment. In addition, fluctuations in foreign currency
exchange rates may affect the results of operations of Products Corporation
and the value of its foreign assets, which in turn may adversely affect
reported earnings and, accordingly, the comparability of period-to-period
results of operations. Changes in currency exchange rates may affect the
relative prices at which Products Corporation and foreign competitors sell
products in the same market. Products Corporation's net sales outside of
the United States were 40.4% and 41.5% for the nine months ended September
30, 2000 and 1999, respectively, and 43.8%, 40.3% and 41.7% for 1999, 1998
and 1997, respectively. In addition, changes in the value of the relevant
currencies may affect the cost of certain items required in Products
Corporation's operations. Products Corporation enters into forward foreign
exchange contracts to hedge certain cash flows denominated in foreign
currency. There were no such contracts outstanding as of September 30, 2000
and December 31, 1999. Products Corporation recorded net foreign currency
gains (losses) of ($1.0) million and ($0.2) million for the nine months
ended September 30, 2000 and 1999, respectively, and of $0.5 million,
($4.6) million and ($6.4) million for 1999, 1998 and 1997, respectively. We
can offer no assurances as to the future effect of changes in social,
political and economic conditions on the business or financial condition of
Products Corporation.
You Cannot Be Sure That an Active Trading Market Will Develop for the New Notes
There is no existing trading market for the new notes. We do not
intend to apply for listing or quotation of the new notes on any exchange.
Therefore, we do not know the extent to which investor interest will lead
to the development of a trading market or how liquid that market might be,
nor can we make any assurances regarding the ability of new note holders to
sell their new notes or the price at which the new notes might be sold. As
a result, the market price of the new notes could be adversely affected.
Historically, the market for non-investment grade debt, such as the new
notes, has been subject to disruptions that have caused substantial
volatility in the prices of such securities. Any such disruptions may have
an adverse affect on holders of the new notes.
Control by MacAndrews & Forbes
REV Holdings is indirectly owned through MacAndrews & Forbes by
Ronald O. Perelman. MacAndrews & Forbes will therefore be able to direct
and control our policies and those of our subsidiaries, including mergers,
sales of assets and similar transactions. Shares of our common stock and
shares of common stock of intermediate holding companies are or may from
time to time be pledged to secure obligations of MacAndrews & Forbes or its
affiliates. A foreclosure upon any such shares of common stock could
constitute a change of control under certain debt instruments of our
subsidiaries. A change of control constitutes an event of default, which
would permit the lenders to accelerate Products Corporation's Credit
Agreement. In addition, holders of certain debt securities of Products
Corporation may require Products Corporation to repurchase their notes
under those circumstances. See "--The Value of the Collateral May
Diminish." Products Corporation may not have sufficient funds at the time
of the change of control to repay in full the borrowings under the Credit
Agreement or to repurchase its debt securities. See "--The New Notes
Effectively Will Be Junior to Indebtedness and Liabilities of Subsidiaries"
and "--The Value of the Collateral May Diminish."
Forward-Looking Statements
This prospectus contains forward-looking statements that involve
risks and uncertainties. Our actual results may differ materially from
those discussed in such forward-looking statements. Such statements
include, without limitation, our expectations and estimates as to:
o the introduction of new products;
o future financial performance;
o the effect on sales of the reduction of overall U.S.
customer inventories including the timing thereof;
o the effect on sales of political and/or economic conditions
and competitive activities in certain markets;
o our estimate of restructuring activities, restructuring
costs and benefits;
o Products Corporation's plans with respect to and estimate of
the timing of the shutdown of its Phoenix and Canada
manufacturing operations, the charges, the cash cost and the
annual savings resulting from such shutdowns;
o our expectation that the new trade program for our U.S.
customers will increase consumer sell-through of our
products, drive market growth, result in more efficient
ordering and shipping and reduce returns;
o cash flow from operations;
o capital expenditures;
o our qualitative and quantitative estimates as to market risk
sensitive instruments;
o our expectations about the effects of the transition to the
Euro;
o the availability of funds from currently available credit
facilities, renewals of short-term borrowings, capital
contributions or loans from affiliates, the sale of our
assets or operations or additional shares of Revlon, Inc. or
the sale of equity securities of REV Holdings;
o Products Corporation's intent to amend its Credit Agreement
to fund proposed restructuring plans and to amend certain of
the financial covenants in the Credit Agreement for 2001 and
2002; and
o the effect of the adoption of certain accounting standards.
Statements that are not historical facts, including statements
about our beliefs and expectations, are forward-looking statements.
Forward-looking statements can be identified by, among other things, the
use of forward-looking language, such as "believes," "expects,"
"estimates," "may," "will," "should," "seeks," "plans," "scheduled to,"
"anticipates" or "intends" or the negative of those terms, or other
variations of those terms or comparable language, or by discussions of
strategy or intentions. Forward-looking statements speak only as of the
date they are made, and we undertake no obligation to update them. A number
of important factors could cause actual results to differ materially from
those contained in any forward-looking statement. In addition to factors
that may be described in our filings with the Commission, including this
prospectus, the following factors, among others, could cause the our actual
results to differ materially from those expressed in any forward-looking
statements made by us:
o difficulties or delays in developing and introducing new
products or failure of customers to accept new product
offerings;
o changes in consumer preferences, including reduced consumer
demand for our color cosmetics and other current products;
o unanticipated costs or difficulties or delays in completing
projects associated with our strategy to improve operating
efficiencies;
o the inability to renew short-term borrowings, secure capital
contributions or loans from affiliates or sell our assets or
operations or additional shares of Revlon, Inc. or equity
securities of REV Holdings;
o effects of and changes in political and/or economic
conditions, including inflation and monetary conditions, and
in trade, monetary, fiscal and tax policies in international
markets, including but not limited to Brazil;
o actions by competitors, including business combinations,
technological breakthroughs, new products offerings and
marketing and promotional successes;
o combinations among significant customers or the loss,
insolvency or failure to pay debts by a significant customer
or customers;
o lower than expected sales as a result of the reduction of
overall U.S. customer inventories;
o difficulties, delays or unanticipated costs or less than
expected savings and other benefits resulting from our
restructuring activities;
o difficulties or delays in implementing, higher than expected
charges and cash costs or lower than expected savings from
the shutdown of manufacturing operations in Phoenix and
Canada;
o difficulties or delays in implementing or achieving the
intended results of the new trade program including
increased consumer sell-through, market growth and lower
returns or unexpected consequences from the implementation of
the new trade program including the possible effect on sales;
o interest rate or foreign exchange rate changes affecting us
and our market sensitive financial instruments;
o difficulties, delays or unanticipated costs associated with
the transition to the Euro;
o difficulties, delays or inability to amend the Credit
Agreement to fund proposed restructuring plans and the
financial covenants in the Credit Agreement for 2001 and
2002; and
o the effects of our adoption of certain new accounting
standards.
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer.
CAPITALIZATION
The following table sets forth (i) our actual capitalization as of
September 30, 2000 and (ii) our capitalization as of September 30, 2000, as
adjusted to reflect the consummation of the exchange offer (assuming all of
the old notes not held by an affiliate are exchanged) and the contribution
of the old notes held by an affiliate to the capital of REV Holdings
assuming such transactions occurred on September 30, 2000. The information
presented below should be read in conjunction with "Selected Historical and
Pro Forma Financial Data" included elsewhere in this prospectus and in the
consolidated financial statements of REV Holdings and the related notes,
and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included in the reports of REV Holdings incorporated
by reference herein and attached as Annex A and Annex B. See "Available
Information."
<TABLE>
<CAPTION>
September 30, 2000
Unaudited
--------------------------
As
Actual Adjusted
------ --------
(Dollars in millions,
except share data)
Current liabilities:
<S> <C> <C>
Short-term borrowings - third parties............................. $ 25.8 25.8
Senior Secured Discount Notes due 2001 (a)........................ 734.0 --
Accounts payable.................................................. 85.0 85.0
Accrued expenses and other........................................ 289.4 289.4
---------- --------
Total current liabilities..................................... 1,134.2 400.2
Long-term debt:
Working capital lines............................................. 403.9 403.9
8 1/8% Senior Notes due 2006...................................... 249.5 249.5
9% Senior Notes due 2006.......................................... 250.0 250.0
8 5/8% Senior Subordinated Notes due 2008......................... 649.8 649.8
12% Senior Secured Notes due 2004 (b)............................. -- 133.4
Long-term debt - affiliates............................................. 24.1 24.1
Other long-term liabilities............................................. 213.4 216.5
Stockholder's deficiency:
Common stock, par value $1.00 per share, 1,000 shares authorized,
issued and outstanding........................................ -- --
Capital deficiency................................................ (408.8) 190.3
Accumulated deficit since June 24, 1992........................... (1,349.8) (1,352.9)
Accumulated other comprehensive loss.............................. (35.5) (35.5)
---------- --------
Total stockholder's deficiency................................ (1,794.1) (1,198.1)
---------- --------
Total liabilities and stockholder's deficiency................ $ 1,130.8 $ 1,129.3
========== ==========
------------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects the accreted value of the notes at September 30, 2000
($953.25 per $1,000 principal amount at maturity).
(b) The new notes issued in the exchange offer will be recorded at
the carrying value of the old notes and a new effective interest
rate will be determined based on the cash flow requirements of
the new notes. The principal amount of the new notes (assuming
all the old notes not held by an affiliate at December 13, 2000
are exchanged) is $140.0.
As of September 30, 2000, the accreted value of the old notes was
$953.25 per $1,000 principal amount at maturity. At December 13, 2000,
$770.00 million principal amount at maturity of old notes were outstanding,
of which approximately $630 million principal amount at maturity were held
by an affiliate of REV Holdings. REV Holdings has no cash available, and is
not expected to have any cash available, to pay the principal amount at
maturity of the old notes in March 2001. At December 13, 2000, based on the
last reported sale price of Revlon, Inc. Class A Common Stock on the NYSE
of $4.95 per share, the market value of the Old Notes Collateral was
approximately $99,000,000 or approximately $128.57 for each $1,000
principal amount at maturity of the old notes. The proceeds from the sale
or sales of all of the Old Notes Collateral, therefore, would not be
sufficient to satisfy the amounts due on the outstanding old notes. In
addition, Revlon, Inc. has no obligation nor any compelling business reason
to declare any dividends or make any distributions for the benefit of REV
Holdings prior to the maturity of the old notes. Therefore, if less than
all of the outstanding old notes are exchanged in the exchange offer, REV
Holdings may be forced to seek protection under Chapter 11 of the United
States Bankruptcy Code. See "Risk Factors--Consequences of Failure to
Exchange."
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The consolidated Statement of Operations data for each of the years
in the five-year period ended December 31, 1999 and the consolidated
Balance Sheet data as of December 31, 1999, 1998, 1997 and 1996 have been
derived from our audited consolidated financial statements. The
consolidated Balance Sheet data as of December 31, 1995 have been derived
from the unaudited consolidated balance sheet for such period, which has
been restated to reflect our former retail and outlet store business as
discontinued operations. The selected historical financial data for the
nine months ended September 30, 2000 and 1999 and as of September 30, 2000
have been derived from our unaudited consolidated financial statements,
which reflect, in the opinion of our management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial data for such periods. Results for interim periods are not
necessarily indicative of the results for the full year. In connection with
the exchange offer, old notes held by nonaffiliates may be exchanged for
new notes with a like principal amount at maturity. Pursuant to Emerging
Issues Task Force Issue 96-19, Debtor's Accounting for a Modification or
Exchange of Debt Instruments, we believe that the terms of the new notes
are not substantially different from those of the old notes. Accordingly,
the carrying amount of the old notes at the time of the exchange will
remain unchanged and a new effective interest rate will be determined based
upon the cash flow requirements of the new notes. Remaining debt issuance
costs will be amortized over the period from the date of the exchange
through the maturity date of the new notes. Any amounts paid to third
parties, other than the creditors, relating to the exchange will be
expensed as incurred. The pro forma Statement of Operations data for the
year ended December 31, 1999 and the nine months ended September 30, 2000
give pro forma effect to the consummation of the exchange offer (assuming
all of the old notes not held by an affiliate are exchanged) and the
contribution of the old notes held by our affiliate to the capital of REV
Holdings assuming such transactions occurred on January 1, 1999. The pro
forma Balance Sheet data as of September 30, 2000 give pro forma effect to
the consummation of the exchange offer (assuming all of the old notes not
held by an affiliate are exchanged) and the contribution of the old notes
held by our affiliate to the capital of REV Holdings assuming such
transactions occurred on September 30, 2000. The pro forma adjustments are
based upon available information and certain assumptions that management of
REV Holdings believes are reasonable. The pro forma financial data do not
purport to represent the results of operations or the financial position of
REV Holdings that actually would have occurred had the foregoing
transactions been consummated on the aforesaid dates.
You also should read "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the consolidated financial
statements and related notes, the report of our independent auditors
included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, incorporated in this prospectus by reference and
attached as Annex A, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the consolidated financial statements
and related notes included in our Quarterly Report on Form 10-Q for the
quarter ended September 30, 2000, incorporated in this prospectus by
reference and attached as Annex B.
<TABLE>
<CAPTION>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
(DOLLARS IN MILLIONS) (DOLLARS IN MILLIONS)
-------------------- --------------------------------------------------------
HISTORICAL STATEMENT OF OPERATIONS
DATA (a): 2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales....................... $1,170.5 $1,446.9 $1,861.3 $2,252.2 $2,238.6 $2,092.1 $1,867.3
Gross profit.................... 753.0 936.3 1,175.2 1,486.5 1,495.5 1,403.2 1,252.4
Selling, general and
administrative expenses..... 686.6 1,001.0 1,347.6 1,328.8 1,277.0 1,204.0 1,104.9
Restructuring costs
and other, net.............. 28.3(b) 22.1(c) 40.2(c) 33.1(d) 3.6(e) -- --
---------- --------- ---------- ---------- ---------- --------- ---------
Operating income (loss)......... 38.1 (86.8) (212.6) 124.6 214.9 199.2 147.5
Interest expense, net........... 162.7 156.5 212.6 197.6 212.5 235.7 230.5
Amortization of debt issuance
costs....................... 7.2 6.0 7.9 9.0 11.6 12.5 15.2
Gain on sale of subsidiary stock (1.1) (0.1) (0.1) (2.6) (0.3) (187.8)(f) --
Other, net...................... (2.0) 0.4 0.4 9.1 11.9 12.1 12.7
---------- --------- ---------- ---------- ---------- --------- ---------
(Loss) income from continuing
operations before income
taxes....................... (128.7) (249.6) (433.4) (88.5) (20.8) 126.7 (110.9)
Provision for income taxes...... 7.0 5.6 9.1 5.0 9.3 25.5 25.4
---------- --------- ---------- ---------- ---------- --------- ---------
(Loss) income from continuing
operations.................. (135.7) (255.2) (442.5) (93.5) (30.1) 101.2 (136.3)
(Loss) income from discontinued
operations.................. -- -- -- (64.2) 0.7 0.4 (4.0)
Extraordinary items- early
extinguishments of debt..... -- -- -- (51.7) (58.7) (6.6) --
---------- --------- ---------- ---------- ---------- --------- ---------
Net (loss) income............... $(135.7) $(255.2) $(442.5) $(209.4) $(88.1) $95.0 $(140.3)
========== ========= ========== ========== ========== ========== =========
OTHER DATA:
Net cash (used for) provided by
operating activities $(131.9) $(90.8) $(82.8) $(51.5) $10.2 $(10.4) $(45.9)
Net cash provided by (used for)
investing activities 325.2 (29.8) (40.7) 246.4 (403.9) (61.8) (69.5)
Net cash (used for) provided by
financing activities (193.2) 187.0 118.5 (178.3) 403.0 78.0 125.6
Ratio of earnings to fixed
charges (g)................. -- -- -- -- -- 1.5x --
EBITDA (h)...................... $151.5 $22.9 $(50.6) $263.9 $311.6 $279.6 $222.9
Ratio of EBITDA to interest
expense, net................ 0.9x 0.1x -- 1.3x 1.5x 1.2x 1.0x
PRO FORMA STATEMENT OF OPERATIONS
DATA (I):
Operating income (loss)......... $38.1 $(212.6)
Interest expense, net........... 117.4 158.4
Amortization of debt issuance costs 4.7 4.6
Loss from continuing operations. (87.9) (385.0)
Ratio of earnings to fixed
charges (j)................. -- --
EBITDA $151.5 $(50.6)
Ratio of EBITDA to
interest expense, net....... 1.3x --
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA: SEPTEMBER 30, 2000 DECEMBER 31,
(DOLLARS IN MILLIONS) (DOLLARS IN MILLIONS)
---------------------- ----------------------------------------------------
PRO
ACTUAL FORMA (K) 1999 1998 1997 1996 1995
---------- ----------- ------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets.................... $1,130.8 $1,129.3 $1,562.8 $1,838.1 $2,099.6 $1,622.3 $1,541.8
Long-term debt (including
current portion)................ 2,311.3 1,710.7 2,450.8 2,271.2 2,305.0 2,330.6 2,339.6
Total stockholder's deficiency.. (1,794.1) (1,198.1) (1,691.0) (1,253.0) (994.7) (1,461.7) (1,556.0)
--------------------------------------------------------------------------------------------------------------
See accompanying notes to Summary Financial Data
</TABLE>
NOTES TO SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(a) On March 30, 2000 and on May 8, 2000, Products Corporation
completed the disposition of its worldwide professional products
line and its Plusbelle brand in Argentina, respectively.
Accordingly, the selected historical and pro forma financial data
include the results of operations of the professional products line
and Plusbelle brand through the dates of their respective
dispositions.
(b) In the first six months of 2000, we recorded a charge of $14.6
million relating to a restructuring plan that began in the fourth
quarter of 1999, principally for additional employee severance and
other personnel benefits and to restructure certain operations
outside the United States including exiting certain operations in
Japan.
During the third quarter of 2000, we continued to re-evaluate our
organizational structure. As part of this re-evaluation, we are
developing a new restructuring plan designed to improve
profitability by reducing personnel and consolidating manufacturing
facilities. In the third quarter of 2000, we recorded a charge of
$13.7 million related to such plan, principally for additional
employee severance and other personnel benefits and to consolidate
worldwide operations.
(c) In the first nine months of 1999, we continued to implement a
restructuring plan established in the fourth quarter of 1998
referred to below for which we recorded a charge of $20.5 million
for employee severance and other personnel benefits, costs
associated with the exit from leased facilities as well as other
costs. Also in 1999, we consummated an exit from a non-core
business, resulting in a charge of $1.6 million.
During the fourth quarter of 1999, we continued to re-evaluate our
organizational structure and implemented a new restructuring plan
principally at our New York headquarters and New Jersey locations
resulting in a charge of $18.1 million principally for employee
severance. As part of this restructuring plan, we reduced personnel
and consolidated excess leased real estate.
(d) In the fourth quarter of 1998, we committed to a restructuring plan
to realign and reduce personnel, exit excess leased real estate,
realign and consolidate regional activities, reconfigure certain
manufacturing operations and exit certain product lines and
recognized a net charge of $42.9 million, which includes $2.7
million charged to cost of sales. In the third quarter of 1998, we
recognized a gain of approximately $7.1 million for the sale of the
wigs and hairpieces portion of our business in the United States.
(e) In 1997, we incurred restructuring costs of $20.6 million in
connection with the implementation of our business strategy to
rationalize factory operations. These costs primarily included
severance and other costs related to the rationalization of certain
factory and warehouse operations worldwide. Such costs were
partially offset by an approximately $12.7 million settlement of a
claim and related gains of approximately $4.3 million on the sales
of certain factory operations outside the United States.
(f) Represents the gain on the sale of subsidiary stock recognized as a
result of Revlon, Inc.'s initial public offering on March 5, 1996.
(g) Earnings used in computing the ratio of earnings to fixed charges
consist of (loss) income from continuing operations before income
taxes plus fixed charges. Fixed charges consist of interest expense
(including amortization of debt issuance costs, but not losses
relating to the early extinguishment of debt) and 33% of rental
expense (considered to be representative of the interest factor).
Fixed charges exceeded earnings before fixed charges by $128.7
million for the nine months ended September 30, 2000, $249.6
million for the nine months ended September 30, 1999, $433.4
million in 1999, $88.5 million in 1998, $20.8 million in 1997 and
$110.9 million in 1995.
(h) EBITDA is defined as operating income (loss) before restructuring
costs and other, net, plus depreciation and amortization other than
that relating to early extinguishment of debt, debt discount and
debt issuance costs. EBITDA is presented here not as a measure of
operating results but rather as a measure of debt service ability.
EBITDA should not be considered in isolation or as a substitute for
net income or cash flow from operations prepared in accordance with
generally accepted accounting principles as a measure of our
profitability or liquidity. EBITDA does not take into account our
debt service requirements and other commitments and, accordingly,
is not necessarily indicative of amounts that may be available for
discretionary uses.
(i) The pro forma statement of operations data reflect (i) the
elimination of interest expense and the decrease in amortization of
debt issuance costs related to the old notes (as a result of
amortizing debt issuance costs related to old notes exchanged in
the offer through the maturity date of the new notes) of $67.5
million and $3.3 million for the year ended December 31, 1999,
respectively, and $55.3 million and $2.5 million for the nine
months ended September 30, 2000, respectively and (ii) interest
expense of $13.3 million and $10.0 million for the year ended
December 31, 1999 and September 30, 2000, respectively, on the
carrying value of the new notes of $111.1 million (balance
outstanding on January 1, 1999) based on an effective interest rate
of approximately 12%. Such pro forma results do not include a
nonrecurring charge of $3.1 million for fees and expenses related
to the exchange offer expected to be paid to third parties.
(j) As adjusted to reflect the exchange offer and the contribution of
the old notes held by our affiliate to our capital as if such
transactions occurred on January 1, 1999, fixed charges would have
exceeded earnings before fixed charges by $80.9 million for the
nine months ended September 30, 2000 and $375.9 million for the
year ended December 31, 1999.
(k) The pro forma balance sheet data reflect (i) the retirement of
$133.4 million accreted value of old notes in the exchange offer
(ii) the issuance of new notes in the exchange offer of $133.4
million (the accreted value as of September 30, 2000 of the old
notes held by nonaffiliates) (iii) the charge to capital of $599.1
million reflecting the contribution of the old notes held by our
affiliate as of December 11, 2000 to our capital (accreted value of
$600.6 million as of September 30, 2000) net of the related debt
issuance costs of $1.5 million and (iv) the charge to retained
earnings and increase in long-term liabilities reflecting $3.1
million of the estimated fees and expenses related to the exchange
offer payable to our affiliate.
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Subject to terms and conditions, we will accept for exchange old
notes (other than old notes held by our affiliates) that are properly
tendered on or prior to the Expiration Date and not withdrawn as permitted
below. As used herein, the term "Expiration Date" means 5:00 p.m., New York
City time, on , 2000. We may, however, in our sole discretion, extend the
period of time during which the exchange offer is open. The term
"Expiration Date" means the latest time and date to which the exchange
offer is extended.
As of the date of this prospectus, $770.0 million principal amount
at maturity of old notes are outstanding, of which approximately $630
million principal amount at maturity are held by our affiliates. This
prospectus, together with the letter of transmittal, is first being sent on
or about the date hereof, to all holders of old notes known to us. Our
obligation to accept old notes for exchange pursuant to the exchange offer
is subject to certain obligations as set forth under "--Conditions to the
Exchange Offer."
We expressly reserve the right, at any time, to extend the period
of time during which the exchange offer is open, and delay acceptance for
exchange of any old notes, by giving oral or written notice of such
extension to the holders thereof as described below. During any such
extension, all old notes previously tendered will remain subject to the
exchange offer and may be accepted for exchange by us. Any old notes not
accepted for exchange for any reason will be returned without expense to
the tendering holder as promptly as practicable after the expiration or
termination of the exchange offer.
Old notes tendered in the exchange offer must be in denominations
of principal amount of $1,000 and any integral multiple thereof.
We expressly reserve the right to amend or terminate the exchange
offer, and not to accept for exchange any old notes, upon the occurrence of
any of the conditions of the exchange offer specified under "--Conditions
to the Exchange Offer." We will give oral or written notice of any
extension, amendment, non-acceptance or termination to the holders of the
old notes as promptly as practicable. Such notice, in the case of any
extension, will be issued by means of a press release or other public
announcement no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
The tender to us of old notes by you as set forth below and our
acceptance of the old notes will constitute a binding agreement between us
and you upon the terms and subject to the conditions set forth in this
prospectus and in the accompanying letter of transmittal. Except as set
forth below, to tender old notes for exchange pursuant to the exchange
offer, you must transmit a properly completed and duly executed letter of
transmittal, including all other documents required by such letter of
transmittal or, in the case of a book-entry transfer, an agent's message in
lieu of such letter of transmittal, to The Bank of New York, as exchange
agent, at the address set forth below under "Exchange Agent" on or prior to
the Expiration Date. In addition, either:
- a timely confirmation of a book-entry transfer (a
"book-entry confirmation") of such old notes, if such
procedure is available, into the exchange agent's account at
DTC pursuant to the procedure for book-entry transfer
described beginning on page must be received by the exchange
agent, prior to the Expiration Date, with the letter of
transmittal or an agent's message in lieu of such letter of
transmittal,
- the holder must comply with the guaranteed delivery procedures
described below, or
- certificates for such old notes must be received by the exchange
agent along with the letter of transmittal.
The term "agent's message" means a message, transmitted by DTC to and
received by the exchange agent and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgment
from the tendering participant stating that such participant has received
and agrees to be bound by the letter of transmittal and that we may enforce
such letter of transmittal against such participant.
The method of delivery of old notes, letters of transmittal and all
other required documents is at your election and risk. If such delivery is
by mail, it is recommended that you use registered mail, properly insured,
with return receipt requested. In all cases, you should allow sufficient
time to assure timely delivery. No letter of transmittal or old notes
should be sent to us.
Signatures on a letter of transmittal or a notice of withdrawal, as
the case may be, must be guaranteed unless the old notes surrendered for
exchange are tendered:
- by a holder of the old notes who has not completed the box
entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the letter of transmittal, or
- for the account of an Eligible Institution (as defined below).
In the event that signatures on a letter of transmittal or a notice of
withdrawal are required to be guaranteed, such guarantees must be by a firm
which is a member of the Securities Transfer Agent Medallion Program, the
Stock Exchanges Medallion Program or the New York Stock Exchange Medallion
Program (each such entity being hereinafter referred to as an "Eligible
Institution"). If old notes are registered in the name of a person other
than the signer of the letter of transmittal, the old notes surrendered for
exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as we or the
exchange agent determine in our sole discretion, duly executed by the
registered holders with the signature thereon guaranteed by an Eligible
Institution.
We or the exchange agent in our sole discretion will make a final
and binding determination on all questions as to the validity, form,
eligibility (including time of receipt) and acceptance of old notes
tendered for exchange. We reserve the absolute right to reject any and all
tenders of any particular old note not properly tendered or to not accept
any particular old note which acceptance might, in our judgment or our
counsel's, be unlawful. We also reserve the absolute right to waive any
defects or irregularities or conditions of the exchange offer as to any
particular old note either before or after the Expiration Date (including
the right to waive the ineligibility of any holder who seeks to tender old
notes in the exchange offer). Our or the exchange agent's interpretation of
the terms and conditions of the exchange offer as to any particular old
note either before or after the Expiration Date (including the letter of
transmittal and the instructions thereto) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with
tenders of old notes for exchange must be cured within a reasonable period
of time, as we determine. We are not, nor is the exchange agent or any
other person, under any duty to notify you of any defect or irregularity
with respect to your tender of old notes for exchange, and no one will be
liable for failing to provide such notification.
If the letter of transmittal is signed by a person or persons other
than the registered holder or holders of old notes, such old notes must be
endorsed or accompanied by powers of attorney signed exactly as the name(s)
of the registered holder(s) that appear on the old notes.
If the letter of transmittal or any old notes or powers of
attorneys are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing.
Unless waived by us or the exchange agent, proper evidence satisfactory to
us of their authority to so act must be submitted with the letter of
transmittal.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the
exchange offer, we will accept, promptly after the Expiration Date, all old
notes properly tendered and will issue the new notes promptly after
acceptance of the old notes. See "--Conditions to the Exchange Offer." For
purposes of the exchange offer, we shall be deemed to have accepted
properly tendered old notes for exchange if and when we give oral
(confirmed in writing) or written notice to the exchange agent.
The holder of each old note accepted for exchange will receive a
new note in the amount equal to the surrendered old note. In all cases,
issuance of new notes for old notes that are accepted for exchange will be
made only after timely receipt by the exchange agent of:
- certificates for such old notes or a timely book-entry
confirmation of such old notes into the exchange agent's
account at DTC,
- a properly completed and duly executed letter of transmittal
or an agent's message in lieu thereof, and
- all other required documents.
If any tendered old notes are not accepted for any reason set forth in the
terms and conditions of the exchange offer or if old notes are submitted
for a greater principal amount than the holder desires to exchange, such
unaccepted or non-exchanged old notes will be returned without expense to
the tendering holder (or, in the case of old notes tendered by book-entry
transfer into the exchange agent's account at DTC pursuant to the
book-entry procedures described below, such non-exchanged old notes will be
credited to an account maintained with DTC) as promptly as practicable
after the expiration or termination of the exchange offer.
BOOK-ENTRY TRANSFERS
For purposes of the exchange offer, the exchange agent will request
that an account be established with respect to the old notes at DTC within
two business days after the date of this prospectus, unless the exchange
agent already has established an account with DTC suitable for the exchange
offer. Any financial institution that is a participant in DTC may make
book-entry delivery of old notes by causing DTC to transfer such old notes
into the exchange agent's account at DTC in accordance with DTC's
procedures for transfer. Although delivery of old notes may be effected
through book-entry transfer at DTC, the letter of transmittal or facsimile
thereof or an agent's message in lieu thereof, with any required signature
guarantees and any other required documents, must, in any case, be
transmitted to and received by the exchange agent at the address set forth
under "--Exchange Agent" on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If you desire to tender your old notes and your old notes are not
immediately available, or time will not permit your old notes or other
required documents to reach the exchange agent before the Expiration Date,
a tender may be effected if:
- the tender is made through an Eligible Institution,
- prior to the Expiration Date, the exchange agent received
from such Eligible Institution a notice of guaranteed
delivery, substantially in the form we provide (by telegram,
telex, facsimile transmission, mail or hand delivery),
setting forth your name and address, the amount of old notes
tendered, stating that the tender is being made thereby and
guaranteeing that within three New York Stock Exchange
("NYSE") trading days after the date of execution of the
notice of guaranteed delivery, the certificates for all
physically tendered old notes, in proper form for transfer,
or a book-entry confirmation, as the case may be, together
with a properly completed and duly executed appropriate
letter of transmittal or facsimile thereof or agent's
message in lieu thereof, with any required signature
guarantees and any other documents required by the letter of
transmittal will be deposited by such Eligible Institution
with the exchange agent, and
- the certificates for all physically tendered old notes, in
proper form for transfer, or a book-entry confirmation, as
the case may be, together with a properly completed and duly
executed appropriate letter of transmittal or facsimile
thereof or agent's message in lieu thereof, with any
required signature guarantees and all other documents
required by the letter of transmittal, are received by the
exchange agent within three NYSE trading days after the date
of execution of the notice of guaranteed delivery.
WITHDRAWAL RIGHTS
You may withdraw your tender of old notes at any time prior to the
Expiration Date. To be effective, a written notice of withdrawal must be
received by the exchange agent at one of the addresses set forth under "--
Exchange Agent." This notice must specify:
- the name of the person having tendered the old notes to be
withdrawn,
- the old notes to be withdrawn (including the principal
amount of such old notes), and
- where certificates for old notes have been transmitted, the
name in which such old notes are registered, if different
from that of the withdrawing holder.
If certificates for old notes have been delivered or otherwise identified
to the exchange agent, then, prior to the release of such certificates, the
withdrawing holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution, unless such holder is an
Eligible Institution. If old notes have been tendered pursuant to the
procedure for book-entry transfer described above, any notice of withdrawal
must specify the name and number of the account at DTC to be credited with
the withdrawn old notes and otherwise comply with the procedures of DTC.
We or the exchange agent will make a final and binding
determination on all questions as to the validity, form and eligibility
(including time of receipt) of such notices. Any old notes so withdrawn
will be deemed not to have been validly tendered for exchange for purposes
of the exchange offer. Any old notes tendered for exchange but not
exchanged for any reason will be returned to the holder without cost to
such holder (or, in the case of old notes tendered by book-entry transfer
into the exchange agent's account at DTC pursuant to the book-entry
transfer procedures described above, such old notes will be credited to an
account maintained with DTC for the old notes) as soon as practicable after
withdrawal, rejection of tender or termination of the exchange offer.
Properly withdrawn old notes may be retendered by following one of the
procedures described under "--Procedures for Tendering Old Notes" above at
any time on or prior to the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the exchange offer, we are
not required to accept for exchange, or to issue new notes in exchange for,
any old notes and may terminate or amend the exchange offer, if any of the
following events occur prior to acceptance of such old notes:
(a) there shall be threatened, instituted or pending any
action or proceeding before, or any injunction, order or decree
shall have been issued by, any court or governmental agency or
other governmental regulatory or administrative agency or
commission,
(1) seeking to restrain or prohibit the making or
consummation of the exchange offer or any other transaction
contemplated by the exchange offer, or assessing or seeking
any damages as a result thereof, or
(2) resulting in a material delay in our ability to
accept for exchange or exchange some or all of the old notes
pursuant to the exchange offer;
or any statute, rule, regulation, order or injunction shall be
sought, proposed, introduced, enacted, promulgated or deemed
applicable to the exchange offer or any of the transactions
contemplated by the exchange offer by any government or
governmental authority, domestic or foreign, or any action shall
have been taken, proposed or threatened, by any government,
governmental authority, agency or court, domestic or foreign, that
in our sole judgment might, directly or indirectly, result in any
of the consequences referred to in clauses (1) or (2) above; or
(b) there shall have occurred:
(1) any general suspension of or general limitation
on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market,
(2) any limitation by a governmental agency or
authority which may adversely affect our ability to complete
the transactions contemplated by the exchange offer,
(3) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United
States or any limitation by any governmental agency or
authority which adversely affects the extension of credit or
(4) a commencement of a war, armed hostilities or
other similar international calamity directly or indirectly
involving the United States, or, in the case of any of the
foregoing existing at the time of the commencement of the
exchange offer, a material acceleration or worsening
thereof; or
(c) any change (or any development involving a prospective
change) shall have occurred or be threatened in our business,
properties, assets, liabilities, financial condition, operations,
results of operations or prospects and our subsidiaries taken as a
whole that, in our reasonable judgment, is or may be adverse to us,
or we have become aware of facts that, in our reasonable judgment,
have or may have adverse significance with respect to the value of
the old notes or the new notes;
which in our reasonable judgment in any case, and regardless of the
circumstances (including any action by us) giving rise to any such
condition, makes it inadvisable to proceed with the exchange offer and/or
with such acceptance for exchange or with such exchange.
The foregoing conditions are for our sole benefit and may be
asserted by us regardless of the circumstances giving rise to any condition
or may be waived by us in whole or in part at any time in our reasonable
discretion. Our failure at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time.
In addition, we will not accept for exchange any old notes
tendered, and no new notes will be issued in exchange for any such old
notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement, of which this prospectus constitutes
a part, or the qualification of the indenture under the Trust Indenture Act
of 1939, as amended.
EXCHANGE AGENT
The Bank of New York has been appointed as the exchange agent for
the exchange offer. All executed letters of transmittal should be directed
to the exchange agent at the address set forth below. Questions and
requests for assistance, requests for additional copies of this prospectus
or of the letter of transmittal and requests for notices of guaranteed
delivery should be directed to the exchange agent addressed as follows:
<TABLE>
<CAPTION>
THE BANK OF NEW YORK
AS EXCHANGE AGENT
BY REGISTERED OR CERTIFIED MAIL: BY HAND AND OVERNIGHT COURIER:
<S> <C> <C>
The Bank of New York The Bank of New York
101 Barclay Street, 7E 101 Barclay Street, Corporate Trust Services Window
New York, New York 10286 New York, New York 10286
Attention: ____________ Attention: ________
Reorganization Department Reorganization Department
BY FACSIMILE: CONFIRM BY TELEPHONE OR FOR INFORMATION:
(212) 815-6339 (212) 815-3750
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF SUCH LETTER OF TRANSMITTAL VIA FACSIMILE
OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF THE
LETTER OF TRANSMITTAL.
FEES AND EXPENSES
The principal solicitation is being made by mail by The Bank of New
York, as exchange agent. We will pay the exchange agent customary fees for
its services, reimburse the exchange agent for its reasonable out-of-pocket
expenses incurred in connection with the provision of these services and
pay other registration expenses, including fees and expenses of the trustee
under the indenture relating to the new notes, filing fees, blue sky fees
and printing and distribution expenses. We may make payment to brokers,
dealers or others soliciting acceptances of the exchange offer.
Additional solicitation may be made by telephone, facsimile or in
person by our and our affiliates' officers and regular employees and by
persons so engaged by the exchange agent.
TRANSFER TAXES
You will not be obligated to pay any transfer taxes in connection
with the tender of old notes in the exchange offer unless you instruct us
to register new notes in the name of, or request that old notes not
tendered or not accepted in the exchange offer be returned to, a person
other than the registered tendering holder. In those cases, you will be
responsible for the payment of any applicable transfer tax.
CONSEQUENCES OF FAILING TO EXCHANGE OLD NOTES
If you do not exchange your old notes for new notes in the exchange
offer, your old notes will continue to be subject to the provisions of the
indenture relating to the old notes regarding transfer and exchange of the
old notes.
DESCRIPTION OF NEW NOTES
The 12% Senior Secured Notes due 2004 (the "New Notes") will be
issued under the Indenture dated as of , 2001 between the Issuer
and _____________, as trustee (the "Trustee"), a copy of which is available
upon request to the Issuer. The terms of the New Notes include those stated
in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (the "Trust Indenture Act"). You can find the
definitions of certain terms used in this description under the subheading
"Certain Definitions."
The following description is a summary of the material provisions
of the Indenture. It does not restate the agreement in its entirety. We
urge you to read the Indenture because it, and not this description,
defines your rights as holders of these Notes. We have filed copies of the
Indenture as an exhibit to the registration statement which includes this
Prospectus.
GENERAL
The New Notes will mature on ____________, 2004. The New Notes will
bear interest from __________, 2001, payable semi-annually in arrears on
_________ __ and _________ __, commencing on _________ __, to the persons
who are holders of record on the close of business on the immediately
preceding ________ __ and ________ __.
The New Notes will bear interest at 12% per annum. The Trustee will
authenticate and deliver Notes for an original issue up to a maximum
aggregate principal amount of $___________.
Interest will be computed on the basis of a 360-day year consisting
of twelve 30-day months. Principal and interest will be payable at the
office of the Trustee, but, at the option of the Issuer, interest may be
paid by check mailed to the registered holders of the New Notes at their
registered addresses. The New Notes will be transferable and exchangeable
at the office of the Trustee and will be issued only in fully registered
form, without coupons, in denominations of $1,000 and any integral multiple
thereof.
OPTIONAL REDEMPTION
The New Notes may be redeemed at any time at the option of the
Issuer in whole, or from time to time in part, at 100% of the principal
amount thereof plus accrued and unpaid interest (the "Redemption Price") to
the date of redemption (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest
payment date).
The Issuer will mail a notice of redemption at least 30 days but
not more than 60 days before any redemption date to each holder of New
Notes to be redeemed at its registered address. The Issuer may redeem notes
in denominations larger than $1,000 principal amount, but only in whole
multiples of $1,000. If money sufficient to pay the Redemption Price of all
New Notes (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date, then on
and after such date interest will cease to accrue on such New Notes (or
such portions thereof) called for redemption.
SINKING FUND
There will be no mandatory sinking fund payments for the New Notes.
NON-RECOURSE GUARANTY
REV Guarantor, as primary obligor and not merely as surety, will
irrevocably and unconditionally guarantee (the "Non-Recourse Guaranty") on
a non-recourse basis the punctual payment when due, whether at Stated
Maturity, by acceleration or otherwise, of all Obligations of the Issuer
under the Indenture whether for principal of or interest on the New Notes,
expenses or indemnification obligations in favor of the Trustee or
otherwise (all such Obligations guaranteed by REV Guarantor being the
"Guaranteed Obligations").
REV Guarantor's liability under the Indenture is limited to the
Revlon, Inc. Collateral provided by it and the proceeds realized by the
Trustee upon the sale or other realization of such Revlon, Inc. Collateral,
it being understood that the Non-Recourse Guaranty otherwise is a
nonrecourse obligation of REV Guarantor and that the Trustee's and the
Holders' rights to recover against REV Guarantor under the Indenture will
be limited solely to the Revlon, Inc. Collateral provided by it and the
proceeds realized by the Trustee upon the sale or other realization of such
Revlon, Inc. Collateral pledged pursuant to the Indenture.
Subject to the limited recourse set forth in the immediately
preceding paragraph, REV Guarantor agrees to pay, in addition to the amount
stated above, any and all expenses (including reasonable counsel fees and
expenses) incurred by the Trustee or the holders in enforcing any rights
under the Non-Recourse Guaranty with respect to REV Guarantor.
The Non-Recourse Guaranty is a continuing guarantee and shall (a)
remain in full force and effect until the earlier of (i) the Merger, (ii)
the release of all the Revlon, Inc. Collateral provided by REV Guarantor,
pursuant to the terms of the Indenture and (iii) the sale or other
disposition of all Revlon, Inc. Collateral provided by REV Guarantor and
the application of the proceeds thereof in accordance with the Indenture,
(b) be binding upon REV Guarantor and (c) inure to the benefit of and be
enforceable by the Trustee, the holders and their successors, transferees
and assigns.
KEEPWELL AGREEMENT
Concurrent with issuance of the New Notes, the Issuer and GSB
Investments Corp., an affiliate of the Issuer, will enter into the Keepwell
Agreement. Under the Keepwell Agreement GSB Investments Corp. will agree to
provide the Issuer with the funds, either through a non-interest bearing
advance that is subordinated to the New Notes or an equity investment, in
an amount equal to any interest payments due on the New Notes, to the
extent that the Issuer does not have sufficient funds on hand to make such
payments on the Business Day immediately preceding the applicable interest
payment date. The Keepwell Agreement is not a guarantee of the payment of
interest on the New Notes. The obligations of GSB Investments Corp. under
the Keepwell Agreement are only enforceable by the Issuer and may not be
enforced by holders of the New Notes or by the Trustee.
COLLATERAL
During the period from the Issue Date through the time of the
Merger, the New Notes will be guaranteed by the Non-Recourse Guaranty which
will be secured by a security interest in and a pledge by REV Guarantor of
all its right, title and interest in and to (i) 52 shares of Revlon, Inc.
Class B Common Stock per $1,000 principal amount of New Notes outstanding
(collectively, the "Pledged Shares," which term shall exclude any Withdrawn
Shares but shall include any Other Revlon Shares (as defined below)) and
(ii) all dividends, cash, instruments and other property and proceeds from
time to time received, receivable or otherwise distributed in respect of or
in exchange for any of the foregoing (clauses (i) and (ii) collectively,
the "Revlon, Inc. Collateral," which term shall exclude any Withdrawn
Collateral).
After the Merger, the New Notes will be secured by a security
interest in and a pledge by the Issuer of all its right, title and interest
in and to the Revlon, Inc. Collateral. The Indenture will permit the
Issuer, so long as no Default has occurred and is continuing and so long as
the Class A shares of Common Stock of Revlon, Inc. and the Class B shares
of Common Stock of Revlon, Inc. are substantially identical except with
respect to voting rights, to withdraw Pledged Shares of either class of
Common Stock of Revlon, Inc., in whole or in part, by substituting therefor
with the Trustee an equal number of shares of the other class of Common
Stock of Revlon, Inc. (such other shares, the "Other Revlon Shares").
The Class A Common Stock and Class B Common Stock of Revlon, Inc.
are substantially identical except that each share of Class A Common Stock
entitles the holder thereof to one vote and each share of Class B Common
Stock entitles the holder to ten votes on all matters submitted to a vote
of stockholders. Each share of Class B Common Stock is convertible at the
holder's option into one share of Class A Common Stock. Upon any transfer
of shares of Class B Common Stock other than to certain permitted
transferees (generally defined to include affiliates of the holder of the
Class B Common Stock), including upon a foreclosure on Pledged Shares, such
shares of Class B Common Stock are automatically converted into shares of
Class A Common Stock.
The Indenture also will permit the Issuer to release Revlon, Inc.
Collateral in whole or in part by substituting therefor with the Trustee
cash or U.S. Government Obligations sufficient for the payment of principal
at maturity or redemption of, and interest on, all the New Notes or the
applicable pro rata portion thereof and by satisfying certain other
conditions, including the delivery to the Trustee of a certificate of an
independent accounting firm as to the sufficiency of such cash and U.S.
Government Obligations (such cash and U.S. Government Obligations, the
"Substitute Collateral"). The Pledged Shares to be withdrawn will consist
of Class B shares of Revlon, Inc. Common Stock and Other Revlon Shares, if
any, in such proportions as the Issuer shall elect. The Indenture will
permit the Issuer to release a portion of the Revlon, Inc. Collateral, so
long as 52 shares of either Class B Common Stock of Revlon, Inc. or Other
Revlon Shares per $1,000 principal amount of outstanding New Notes not
covered by cash or U.S. Government Obligations remain pledged after such
release.
After the Merger, in connection with or after a redemption of the
New Notes in part or upon delivery from time to time by the Issuer of less
than all the New Notes for cancellation, the Indenture will permit the
Issuer to request a release of a portion of the Revlon, Inc. Collateral, so
long as 52 shares of either Class B Common Stock of Revlon, Inc. or Other
Revlon Shares per $1,000 principal amount of New Notes not so redeemed or
delivered and not covered by cash or U.S. Government Obligations, remain
pledged after such release. The Pledged Shares to be withdrawn will consist
of Class B shares of Revlon, Inc. Common Stock and Other Revlon Shares, if
any, in such proportions as the Issuer shall elect. In addition, in
connection with a redemption of New Notes, or with the payment at maturity
of the principal amount of the New Notes, the Indenture permits the Issuer
to request, subject to certain conditions, a release of Substitute
Collateral to the extent necessary to pay the redemption price, purchase
price or principal amount, as the case may be.
The Revlon, Inc. Collateral and the Substitute Collateral are
referred to herein as the "Collateral."
The security interest in the Collateral will be a first priority
security interest. However, absent any Default, REV Guarantor will be able
to vote, as it sees fit in its sole discretion, the Pledged Shares, prior
to the Merger, and the Issuer will be able to vote, as it sees fit in its
sole discretion, the Pledged Shares, after the Merger, provided that no
vote may be cast, and no consent, waiver or ratification given or action
taken, which would be inconsistent with or violate any provision of the
Indenture or the New Notes.
Notwithstanding anything to the contrary in the six preceding
paragraphs, upon satisfaction by the Issuer of the conditions to its legal
defeasance option or its covenant defeasance option or the discharge of the
Indenture, the Lien of the Indenture on all the Collateral will terminate
and all the Collateral will be released without any further action by the
Trustee or any other person.
There can be no assurance that the proceeds of any sale of the
Collateral pursuant to the Indenture following an Event of Default would be
sufficient to satisfy payments due on the New Notes. In addition, the
ability of the holders of New Notes to realize upon the Collateral may be
subject to certain bankruptcy law limitations in the event of a bankruptcy.
If an Event of Default occurs under the Indenture, the Trustee, on
behalf of the holders of the New Notes, in addition to any rights or
remedies available to it under the Indenture, may take such action as it
deems advisable to protect and enforce its rights in the Collateral,
including the institution of foreclosure proceedings. The proceeds received
by the Trustee from any foreclosure will be applied by the Trustee first to
pay the expenses of such foreclosure and fees and other amounts then
payable to the Trustee under the Indenture and, thereafter, to pay the
principal amount of and accrued interest on the New Notes.
CERTAIN COVENANTS
Set forth below are certain covenants contained in the Indenture:
Limitation on Debt of the Issuer and REV Guarantor; Limitation on
Preferred Stock of REV Guarantor. (a) The Issuer will not, and will not
permit, prior to the Merger, REV Guarantor, to, issue any Debt; provided,
however, that the foregoing shall not prohibit the issuance of the
following Debt:
(1) the New Notes, the Old Notes, and the Non-Recourse Guaranty and
Debt issued by the Issuer or REV Guarantor, as applicable, in exchange for,
or the proceeds of which are used to Refinance, any Debt permitted by this
clause (1); provided, however, that in the case of any Debt issued in
connection with a Refinancing, (i) the principal amount (or, in the case of
Debt issued at a discount, the accreted value) of the Debt so issued as of
the date of the Stated Maturity of the Debt being Refinanced will not
exceed the sum of (A) the principal amount (or if the Debt being Refinanced
was issued at a discount, the accreted value) of the Debt being Refinanced
as of the date of the Stated Maturity of the Debt being Refinanced and (B)
any Refinancing Costs thereof, and (ii) the Stated Maturity of the Debt so
issued is later than the Stated Maturity of the New Notes;
(2) any Secured Non-Recourse Guarantee;
(3) Debt of REV Guarantor acquired by the Issuer as a result of the
Merger; and
(4) any Debt incurred in connection with the Keepwell Agreement.
(b) The Issuer will not permit, prior to the Merger, REV Guarantor
to issue any Preferred Stock.
Limitation on Restricted Payments. (a) The Issuer will not, and
will not permit, prior to the Merger, REV Guarantor, directly or
indirectly, to make any Restricted Payment if, at the time such Restricted
Payment is made:
(1) a Default has occurred or is continuing (or would result
therefrom); or
(2) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of (i) 50% of
Consolidated Net Income (or, if such aggregate Consolidated Net Income is a
deficit, minus 100% of such deficit) of the Issuer accrued during the
period (treated as one accounting period) from April 1, 2001, to the end of
the most recent fiscal quarter ending at least 45 days prior to the date of
such Restricted Payment and (ii) the aggregate Net Cash Proceeds from sales
of Capital Stock of the Issuer (other than Redeemable Stock or Exchangeable
Stock) or cash capital contributions made to the Issuer.
(b) The preceding paragraph will not prohibit the following (none
of which will be included in the calculation of the amount of Restricted
Payments, except to the extent expressly provided in clause (ii) below):
(i) so long as no Default has occurred and is continuing or would
result from such transaction, any Restricted Payment to the extent it
consists of Unrestricted Assets;
(ii) dividends paid within 60 days after the date of declaration
thereof, or Restricted Payments made within 60 days after the making of a
binding commitment in respect thereof, if at such date of declaration or
commitment such dividend or other Restricted Payment would have complied
with this covenant; provided, however, that at the time of payment of such
dividend or the making of such Restricted Payment no other Default has
occurred or is continuing (or will result therefrom); provided further,
however, that such dividend or other Restricted Payment shall be included
in the calculation of the amount of Restricted Payments;
(iii) so long as no Default under the Products Corporation
Indentures has occurred and is continuing or would result from such
transaction, amounts paid or property transferred pursuant to the Permitted
Transactions; and
(iv) any payment by REV Guarantor in respect of the Non-Recourse
Guaranty.
(c) The Issuer or REV Guarantor may take actions to make a
Restricted Payment in anticipation of the occurrence of any of the events
described in clause (b) of this covenant; provided, however, that the
making of such Restricted Payment will be conditioned upon the occurrence
of such event.
Limitation on Liens and Sales of Assets and Subsidiary Stock. The
Issuer will not make any Asset Disposition. Prior to the Merger, REV
Guarantor will not make any Asset Disposition. The Issuer and, prior to the
Merger, REV Guarantor will not create, incur or suffer to exist a Lien on
the Collateral (other than the Lien of the Indenture).
Limitation on Transactions with Affiliates. (a) The Issuer will
not, and will not permit, prior to the Merger, REV Guarantor, to conduct
any business or enter into any transaction or series of similar
transactions (including the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate of the Issuer
or any legal or beneficial owner of 10% or more of the voting power of the
Voting Stock of the Issuer or with an Affiliate of any such owner, unless
(i) the terms of such business, transaction or series of
transactions are (A) set forth in writing and (B) at least as favorable to
the Issuer or REV Guarantor, as applicable, as terms that would be
obtainable at the time for a comparable transaction or series of similar
transactions in arm's-length dealings with an unrelated third person and
(ii) to the extent that such business, transaction or series of
transactions (other than Debt issued by the Issuer or REV Guarantor which
is permitted under "--Limitation on Debt of the Issuer and REV Guarantor;
Limitation on Preferred Stock of REV Guarantor") is known by the Board of
Directors of the Issuer or REV Guarantor, as applicable, to involve an
Affiliate of the Issuer or REV Guarantor, as the case may be, or a legal or
beneficial owner of 10% or more of the voting power of the Voting Stock of
the Issuer or an Affiliate of such owner, then (A) with respect to a
transaction or series of related transactions, other than any purchase or
sale of inventory in the ordinary course of business (an "Inventory
Transaction"), involving aggregate payments or other consideration in
excess of $5.0 million, such transaction or series of related transactions
has been approved (and the value of any noncash consideration has been
determined) by a majority of those members of the Board of Directors of the
Issuer or REV Guarantor, as applicable, having no personal stake in such
business, transaction or series of transactions and (B) with respect to a
transaction or series of related transactions, other than any Inventory
Transaction, involving aggregate payments or other consideration in excess
of $20.0 million (with the value of any noncash consideration being
determined by a majority of those members of the Board of Directors of the
Issuer or REV Guarantor, as applicable, having no personal stake in such
business, transaction or series of transactions), such transaction or
series of related transactions has been determined, in the written opinion
of a nationally recognized investment banking firm to be fair, from a
financial point of view, to the Issuer or REV Guarantor, as the case may
be.
(b) The provisions of paragraph (a) will not prohibit (i) any
Restricted Payment permitted to be paid as described under "Limitation on
Restricted Payments" above, (ii) any transaction between the Issuer and any
of its Subsidiaries; provided, however, that no portion of any minority
interest in any such Subsidiary is owned by (x) any Affiliate (other than
the Issuer, REV Guarantor, Revlon, Inc., Products Corporation, a Wholly
Owned Recourse Subsidiary, a Permitted Affiliate or an Unrestricted
Affiliate) of the Issuer or (y) any legal or beneficial owner of 10% or
more of the voting power of the Voting Stock of the Issuer or any Affiliate
of such owner (other than the Issuer, REV Guarantor, Revlon, Inc., Products
Corporation, any Wholly Owned Recourse Subsidiary or an Unrestricted
Affiliate), (iii) any transaction between REV Guarantor and any other
Subsidiaries of the Issuer; provided, however, that no portion of any
minority interest in any such Subsidiary is owned by (x) any Affiliate
(other than the Issuer, REV Guarantor, Revlon, Inc., Products Corporation,
a Wholly Owned Recourse Subsidiary, a Permitted Affiliate or an
Unrestricted Affiliate) of the Issuer or (y) any legal or beneficial owner
of 10% or more of the voting power of the Voting Stock of the Issuer or any
Affiliate of such owner (other than the Issuer, REV Guarantor, Revlon,
Inc., Products Corporation, any Wholly Owned Recourse Subsidiary or an
Unrestricted Affiliate), (iv) any transaction with an officer or director
of the Issuer, Revlon, Inc., Products Corporation or any Subsidiary of
Products Corporation entered into in the ordinary course of business
(including compensation or employee benefit arrangements with any such
officer or director); provided, however, that such officer holds, directly
or indirectly, no more than 10% of the outstanding Capital Stock of the
Issuer, (v) any Permitted Transaction, (vi) the Merger, (vii) any business
or transactions with an Unrestricted Affiliate, (viii) the Keepwell
Agreement, and (ix) any transaction pursuant to which Mafco Holdings will
provide the Issuer and its Subsidiaries at their request and at the cost to
Mafco Holdings with certain allocated services to be purchased from third
party providers, such as legal and accounting services, insurance coverage
and other services.
Limitation on Other Business Activities. The Issuer will not engage
in any trade or business other than (A) the ownership of the Capital Stock
of Revlon, Inc., (B) the ownership of the Capital Stock of one or more
Unrestricted Subsidiaries, and (C) prior to the Merger, the ownership of
the Capital Stock of REV Guarantor. REV Guarantor will not engage in any
trade or business other than (A) the ownership of the Capital Stock of
Revlon, Inc. and (B) providing the Non-Recourse Guaranty. The Issuer will
not permit any Unrestricted Subsidiary to engage in any business other than
the ownership of Capital Stock of one or more Unrestricted Subsidiaries and
the ownership of Unrestricted Assets.
The Merger. The Issuer shall cause the Merger to occur as promptly
as practicable after the indenture relating to the old notes has been
discharged in accordance with its terms.
Maintenance of Non-Investment Company Status. The Issuer will not
at any time be or become an "investment company" registered or required to
become so registered under the Investment Company Act of 1940 or any
successor law, rule or regulation.
SEC Reports. Whether or not required by the SEC, so long as any New
Notes are outstanding, the Issuer will file or cause to be filed with the
SEC and provide the Trustee and holders of the New Notes with the
information, documents and other reports (or copies of such portions of any
of the foregoing as the SEC may by rules and regulations prescribe)
specified in Sections 13 and 15(d) of the Exchange Act. The Issuer also
will comply with the other provisions of TIA Section 314(a).
SUCCESSOR ISSUER
The Issuer may not consolidate with or merge with or into, or
convey, transfer or lease all or substantially all its assets to, any
person unless: (i) the resulting, surviving or transferee person (if not
the Issuer) is organized and existing under the laws of the United States
of America, any State thereof or the District of Columbia and such person
expressly assumes by a supplemental indenture, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the obligations of
the Issuer under the Indenture and the New Notes; (ii) except in the case
of the Merger, immediately after giving effect to such transaction (and
treating any Debt which becomes an obligation of the resulting, surviving
or transferee person or any of its Subsidiaries as a result of such
transaction as having been issued by such person or such Subsidiary at the
time of such transaction), no Default has happened and is continuing; (iii)
except in the case of the Merger, immediately after giving effect to such
transaction, the resulting, surviving or transferee person has a
Consolidated Net Worth in an amount which is not less than the Consolidated
Net Worth of the Issuer immediately prior to such transaction and (iv)
except in the case of the Merger, the Issuer delivers to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the Indenture. The resulting, surviving or transferee person
will be the successor company and thereafter, except in the case of a
lease, the Issuer will be discharged from all obligations and covenants
under the Indenture and the New Notes.
DEFAULTS
An Event of Default is defined in the Indenture as (i) a default in
the payment of interest on the New Notes when due, continued for 30 days,
(ii) a default in the payment of principal of any Note when due at its
Stated Maturity, upon redemption, upon required purchase, upon declaration
or otherwise, (iii) (1) the failure by the Issuer to comply with its
obligations described under "Successor Issuer" above, (2) the failure by
the Issuer to comply with its obligations described under "Maintenance of
Non-Investment Company Status" above, or (3) the Trustee fails to have a
perfected security interest in the Revlon, Inc. Collateral (the "continued
perfection provision"), (iv) the failure by the Issuer to comply for 30
days after notice with any of its obligations under the covenants described
under "Limitation on Debt of the Issuer and REV Guarantor; Limitation on
Preferred Stock of REV Guarantor," "Limitation on Restricted Payments,"
"Limitation on Restrictions on Distributions from Subsidiaries,"
"Limitation on Liens and Sales of Assets and Subsidiary Stock," "Limitation
on Transactions with Affiliates," "Limitation on Other Business Activities"
or "SEC Reports", (v) the failure by the Issuer to comply for 60 days after
notice with its other agreements contained in the Indenture or the New
Notes or with certain representations and warranties given in relation to
the grant of the security interest described under "Collateral" above, (vi)
Debt of the Issuer or any Significant Subsidiary is not paid within any
applicable grace period after final maturity or is accelerated by the
holders thereof because of a default and the total principal amount of the
portion of such Debt that is unpaid or accelerated exceeds $25 million or
its foreign currency equivalent and such default continues for 10 days
after notice (the "cross acceleration provision"), (vii) certain events of
bankruptcy, insolvency or reorganization of the Issuer or a Significant
Subsidiary (the "bankruptcy provisions") or (viii) any judgment or decree
for the payment of money in excess of $25 million is entered against the
Issuer or a Significant Subsidiary and is not discharged and either (A) an
enforcement proceeding has been commenced by any creditor upon such
judgment or decree or (B) there is a period of 60 days following the entry
of such judgment or decree during which such judgment or decree is not
discharged, waived or the execution thereof stayed and, in the case of (B),
such default continues for 10 days after the notice specified in the next
sentence (the "judgment default provision"). However, a default under
clauses (iv), (v), (vi) and (viii)(B) will not constitute an Event of
Default until the Trustee or the holders of 25% in principal amount of the
outstanding Notes notify the Issuer of the default and the Issuer does not
cure such default within the time specified after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the outstanding Notes may
declare the principal amount of and accrued interest on all the New Notes
as of the date of declaration to be due and payable (the "Default Amount").
Upon such a declaration, such Default Amount will be due and payable
immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Issuer occurs, the Default
Amount on all the New Notes as of the date of such Event of Default will
ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holders of the
New Notes. Under certain circumstances, the holders of a majority in
principal amount of the outstanding Notes may rescind any such acceleration
with respect to the New Notes and its consequences.
Subject to the provisions of the Indenture relating to the duties
of the Trustee, in case an Event of Default occurs and is continuing, the
Trustee will be under no obligation to exercise any of the rights or powers
under the Indenture at the request or direction of any of the holders of
the New Notes unless such holders have offered to the Trustee reasonable
indemnity or security against any loss, liability or expense. Except to
enforce the right to receive payment of principal, premium (if any) or
interest when due, no holder of a New Note may pursue any remedy with
respect to the Indenture or the New Notes unless (i) such holder has
previously given the Trustee notice that an Event of Default is continuing,
(ii) holders of at least 25% in principal amount of the outstanding Notes
have requested the Trustee to pursue the remedy, (iii) such holders have
offered the Trustee reasonable security or indemnity against any loss,
liability or expense, (iv) the Trustee has not complied with such request
within 60 days after the receipt thereof and the offer of security or
indemnity and (v) the holders of a majority in principal amount of the
outstanding Notes have not given the Trustee a direction inconsistent with
such request within such 60-day period. Subject to certain restrictions,
the holders of a majority in principal amount of the outstanding Notes are
given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any
trust or power conferred on the Trustee. The Trustee, however, may refuse
to follow any direction that conflicts with law or the Indenture or that
the Trustee determines is unduly prejudicial to the rights of any other
holder of a New Note or that would involve the Trustee in personal
liability.
The Indenture provides that if a Default occurs and is continuing
and is known to the Trustee, the Trustee must mail to each holder of the
New Notes notice of the Default within 90 days after it occurs. Except in
the case of a Default in the payment of principal of or interest on any
Note, the Trustee may withhold notice if and so long as a committee of its
Trust Officers in good faith determines that withholding notice is in the
interest of the holders of the New Notes. In addition, the Issuer is
required to deliver to the Trustee, within 120 days after the end of each
fiscal year, a certificate indicating whether the signers thereof know of
any Default that occurred during the previous year. The Issuer also is
required to deliver to the Trustee, within 30 days after the occurrence
thereof, written notice of any event which would constitute certain
Defaults, their status and what action the Issuer is taking or proposes to
take in respect thereof.
AMENDMENT, SUPPLEMENT, WAIVER
Subject to certain exceptions, the Indenture may be amended or
supplemented with the consent of the holders of a majority in principal
amount of the New Notes then outstanding and any past default or
noncompliance with any provisions may be waived with the consent of the
holders of a majority in principal amount of the New Notes then
outstanding. However, without the consent of each holder of an outstanding
Note affected, no amendment may, among other things, (i) reduce the
principal amount of New Notes whose holders must consent to an amendment,
(ii) reduce the rate of or extend the time for payment of interest on any
Note, (iii) reduce the principal of or extend the Stated Maturity of any
Note or reduce the Default Amount of any Note, (iv) make any Note payable
in money other than that stated in the Note, (v) impair the rights of any
holder of the New Notes to receive payment of principal of and interest on
such holder's Notes on or after the due dates therefor or to institute suit
for the enforcement of any such payment on or with respect to such holder's
Notes, (vi) make any change to the provisions regarding security and the
pledge of collateral that adversely affects such holder or (vii) make any
change in the amendment provisions which require each holder's consent or
in the waiver provisions.
Without the consent of or notice to any holder of the New Notes,
the Issuer and the Trustee may amend or supplement the Indenture to cure
any ambiguity, omission, defect or inconsistency, to provide for the
assumption by a successor corporation of the obligations of the Issuer
under the Indenture if in compliance with the provisions described under
"Successor Issuer" above, to provide for uncertificated Notes in addition
to or in place of certificated Notes (provided that the uncertificated
Notes are issued in registered form for purposes of Section 163(f) of the
Code, or in a manner such that the uncertificated Notes are described in
Section 163(f)(2)(B) of the Code), to add guarantees with respect to the
New Notes or to secure (or provide additional security for) the New Notes,
to add to the covenants of the Issuer for the benefit of the holders of the
New Notes or to surrender any right or power conferred upon the Issuer, to
make any change that does not adversely affect the rights of any holder of
the New Notes or to comply with any requirement of the SEC in connection
with the qualification of the Indenture under the TIA.
The consent of the holders of the New Notes is not necessary under
the Indenture to approve the particular form of any proposed amendment. It
is sufficient if such consent approves the substance of the proposed
amendment.
After an amendment under the Indenture becomes effective, the
Issuer is required to mail to holders of the New Notes a notice briefly
describing such amendment. However, the failure to give such notice to all
holders of the New Notes, or any defect therein, will not impair or affect
the validity of the amendment.
A consent to any amendment or waiver under the Indenture by any
holder of New Notes given in connection with a tender of such holder's
Notes will not be rendered invalid by such tender.
TRANSFER
The New Notes will be issued in registered form and will be
transferable only upon the surrender of the New Notes being transferred for
registration of transfer. The Issuer may require payment of a sum
sufficient to cover any tax, assessment or other governmental charge
payable in connection with certain transfers and exchanges. See "Book
Entry; Delivery and Form."
DEFEASANCE
The Issuer at any time may terminate all its obligations under the
New Notes and the Indenture ("legal defeasance"), except for certain
obligations, including those respecting the defeasance trust and
obligations to register the transfer or exchange of the New Notes, to
replace mutilated, destroyed, lost or stolen Notes and to maintain a
registrar and paying agent in respect of the New Notes. The Issuer at any
time may terminate its obligations under the covenants described under
"Certain Covenants" and "Collateral," above and the operation of the
continued perfection provision, the cross acceleration provision, the
bankruptcy provisions with respect to Significant Subsidiaries and the
judgment default provision described under "Defaults" above and the
limitations contained in clause (iii) described under "Successor Issuer"
above ("covenant defeasance").
The Issuer may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option. If the Issuer
exercises its legal defeasance option, payment of the New Notes may not be
accelerated because of an Event of Default with respect thereto. If the
Issuer exercises its covenant defeasance option, payment of the New Notes
may not be accelerated because of an Event of Default specified in clause
(iii)(2) and (3), (iv), (vi), (vii) (with respect only to Significant
Subsidiaries) or (viii) under "Defaults" above, or because of the failure
of the Issuer to comply with clause (iii) described under "Successor
Issuer" above, or with its obligations under "Collateral" above.
In order to exercise either defeasance option, the Issuer must
irrevocably deposit in trust (the "defeasance trust") with the Trustee
money or U.S. Government Obligations for the payment of principal on the
New Notes and interest thereon to redemption or maturity, as the case may
be, and must comply with certain other conditions, including (unless the
New Notes will mature or be redeemed within 60 days) delivering to the
Trustee an Opinion of Counsel to the effect that holders of the New Notes
will not recognize income, gain or loss for federal income tax purposes as
a result of such deposit and defeasance and will be subject to federal
income tax on the same amount and in the same manner and at the same times
as would have been in the case if such deposit and defeasance had not
occurred (and, in the case of legal defeasance only, such Opinion of
Counsel must be based on a ruling of the Internal Revenue Service or other
change in applicable federal income tax law).
CONCERNING THE TRUSTEE
______________ is to be the Trustee under the Indenture and has
been appointed by the Issuer as Registrar and Paying Agent with regard to
the New Notes.
GOVERNING LAW
The Indenture provides that it and the New Notes will be governed
by, and construed in accordance with, the laws of the State of New York
without giving effect to applicable principles of conflicts of law to the
extent that the application of the law of another jurisdiction would be
required thereby.
CERTAIN DEFINITIONS
"Affiliate" of any specified person means (i) any other person
which, directly or indirectly, is in control of, is controlled by or is
under common control with such specified person or (ii) any other person
who is a director or officer (A) of such specified person, (B) of any
subsidiary of such specified person or (C) of any person described in
clause (i) above. For purposes of this definition, control of a person
means the power, direct or indirect, to direct or cause the direction of
the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions)
of shares of Capital Stock of a Subsidiary of the Issuer or REV Guarantor
(other than directors' qualifying shares and other than Capital Stock of an
Unrestricted Subsidiary or a Non-Recourse Subsidiary), property or other
assets (each referred to for the purposes of this definition as a
"disposition") by the Issuer (including any disposition by means of a
merger, consolidation or similar transaction) other than (i) a disposition
subject to or permitted by the provisions described under "Limitation on
Restricted Payments" above, (ii) a disposition by the Issuer or REV
Guarantor of any Unrestricted Assets, (iii) a disposition of Capital Stock
of Revlon, Inc. to the Issuer or REV Guarantor, (iv) an issuance of
employee stock options, (v) a merger of Revlon, Inc. with or into Products
Corporation or the Issuer and (vi) the Merger.
"Board of Directors" means, with respect to any person, the Board
of Directors of such person or any committee thereof duly authorized to act
on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" of a person means any obligation which
is required to be classified and accounted for as a capital lease on the
face of a balance sheet of such person prepared in accordance with GAAP;
the amount of such obligation shall be the capitalized amount thereof,
determined in accordance with GAAP; and the Stated Maturity thereof shall
be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by
the lessee without payment of a penalty.
"Capital Stock" of any person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents
of or interests in (however designated) equity of such person, including
any Preferred Stock, but excluding any debt securities convertible into or
exchangeable for such equity.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Net Income" means with respect to any person, for any
period, the consolidated net income (or loss) of such person and its
consolidated Subsidiaries for such period as determined in accordance with
GAAP, adjusted to the extent included in calculating such net income (or
loss), by excluding (i) all extraordinary gains or losses; (ii) the portion
of net income (or loss) of such person and its consolidated Subsidiaries
attributable to minority interests in unconsolidated persons except to the
extent that, in the case of net income, cash dividends or distributions
have actually been received by such person or one of its consolidated
Subsidiaries (subject, in the case of a dividend or distribution received
by a Subsidiary of such person, to the limitations contained in clause (v)
below) and, in the case of net loss, such person or any Subsidiary of such
person has actually contributed, lent or transferred cash to such
unconsolidated person; (iii) net income (or loss) of any other person
attributable to any period prior to the date of combination of such other
person with such person or any of its Subsidiaries on a "pooling of
interests" basis; (iv) net gains or losses in respect of dispositions of
assets by such person or any of its Subsidiaries (including pursuant to a
sale-and-leaseback arrangement) other than in the ordinary course of
business; (v) the net income of any Subsidiary of such person to the extent
that the declaration of dividends or distributions by that Subsidiary of
that income is not at the time permitted, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulations
applicable to that Subsidiary or its shareholders; (vi) any net income or
loss of any Non-Recourse Subsidiary, except that such person's equity in
the net income of any such Non-Recourse Subsidiary for such period will be
included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Non-Recourse Subsidiary during such period to
such person as a dividend or other distribution, and (vii) the cumulative
effect of a change in accounting principles; provided, however, that in
calculating Consolidated Net Income of the Issuer, net income of a
Subsidiary of the type described in clause (v) of this definition will not
be excluded.
"Consolidated Net Worth" of any person means, at any date, all
amounts which would, in conformity with GAAP, be included under
shareholders' equity on a consolidated balance sheet of such person as at
such date, less (x) any amounts attributable to Redeemable Stock and (y)
any amounts attributable to Exchangeable Stock.
"Credit Agreement" means the Amended and Restated Credit Agreement
dated as of May 30, 1997, by and among Products Corporation, The Chase
Manhattan Bank, N.A., Citibank, N.A. and Lehman Commercial Paper Inc., as
agents, and the Banks named therein, as the same may be amended or restated
from time to time.
"Debt" of any person means, without duplication, (i) the principal
of and premium (if any) in respect of (A) indebtedness of such person for
money borrowed and (B) indebtedness evidenced by notes, debentures, bonds
or other similar instruments for the payment of which such person is
responsible or liable; (ii) all Capital Lease Obligations of such person;
(iii) all obligations of such person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such person
and all obligations of such person under any title retention agreement (but
excluding trade accounts payable and other accrued current liabilities
arising in the ordinary course of business); (iv) all obligations of such
person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations
with respect to letters of credit securing obligations (other than
obligations described in (i) through (iii) above) entered into in the
ordinary course of business of such person to the extent such letters of
credit are not drawn upon or, if and to the extent drawn upon, such drawing
is reimbursed no later than the third Business Day following receipt by
such person of a demand for reimbursement following payment on the letter
of credit); (v) the amount of all obligations of such person with respect
to the redemption, repayment (including liquidation preference) or other
repurchase of any Redeemable Stock (but excluding in each case any accrued
dividends); (vi) all obligations of the type referred to in clauses (i)
through (v) of other persons and all dividends of other persons for the
payment of which, in either case, such person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including
guarantees of such obligations and dividends; and (vii) all obligations of
the type referred to in clauses (i) through (vi) of other persons secured
by any Lien on any property or asset of such person (whether or not such
obligation is assumed by such person), the amount of such obligation being
deemed to be the lesser of the value of such property or assets or the
amount of the obligation so secured.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchangeable Stock" means any Capital Stock of a person which by
its terms or otherwise is required to be exchanged or converted or is
exchangeable or convertible at the option of the holder into another
security (other than Capital Stock of such person which is neither
Exchangeable Stock nor Redeemable Stock).
"Generally Accepted Accounting Principles" or "GAAP" means
generally accepted accounting principles in the United States, as in effect
from time to time.
"guarantee" means any obligation, contingent or otherwise, of any
person directly or indirectly guaranteeing any Debt or other obligation of
any other person and any obligation, direct or indirect, contingent or
otherwise, of such person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt or other obligation of such
other person (whether arising by virtue of partnership arrangements, or by
agreement to keep-well, to purchase assets, goods, securities or services,
to take-or-pay, or to maintain financial statement conditions or otherwise)
or (ii) entered into for purposes of assuring in any other manner the
obligee of such Debt or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "guarantee" will not include endorsements
for collection or deposit in the ordinary course of business. The term
"guarantee" used as a verb has a corresponding meaning.
"Investment" in any person means any loan or advance to, any net
payment on a guarantee of, any acquisition of Capital Stock, equity
interest, obligation or other security of, or capital contribution or other
investment in, such person. Investments shall exclude advances to customers
and suppliers in the ordinary course of business. The term "Invest" used as
a verb has a corresponding meaning. For purposes of the definitions of
"Non-Recourse Subsidiary," "Unrestricted Subsidiary" and "Restricted
Payment" and for purposes of the "Limitation on Restricted Payments"
covenant, (i) "Investment" shall include a designation after the Issue Date
of a Subsidiary as a Non-Recourse Subsidiary, and such Investment shall be
valued at an amount equal to the portion (proportionate to the Issuer's
equity interest in such Subsidiary) of the fair market value of the net
assets of such Subsidiary at the time that such Subsidiary is designated a
Non-Recourse Subsidiary; and (ii) any property transferred to a
Non-Recourse Subsidiary or an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as
determined in good faith by the Board of Directors of the Issuer (or of
Products Corporation in the case of a Non-Recourse Subsidiary), and if such
property so transferred (including in a series of related transactions) has
a fair market value, as so determined by such Board of Directors, in excess
of $10 million, such determination shall be confirmed by an independent
appraiser.
"issue" means issue, assume, guarantee, incur or otherwise become
liable for. The term "issuance" or "issued" has a corresponding meaning.
"Issue Date" means the date of original issue of the New Notes.
"Issuer" means the party named as such in the Indenture until a
successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained therein and required by the TIA, each
other obligor on the indenture securities.
"Keepwell Agreement" means that certain keepwell agreement dated
___________, 2001, between the Issuer and GSB Investments Corp.
"Legal Holiday" means a Saturday, a Sunday, or a day on which
banking institutions are not required to be open in the State of New York.
"Lien" means any mortgage, pledge, security interest, conditional
sale or other title retention agreement or other similar lien.
"Mafco Holdings" means Mafco Holdings Inc., a Delaware corporation,
and its successors.
"Merger" means the merger of REV Guarantor with and into the
Issuer.
"Net Cash Proceeds," with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents'
fees, discounts or commissions and brokerage, consultant and other fees
actually incurred in connection with such issuance or sale and net of taxes
paid or estimated in good faith to be payable as a result thereof.
"Non-Convertible Capital Stock" means, with respect to any
corporation, any non-convertible Capital Stock of such corporation and any
Capital Stock of such corporation convertible solely into non-convertible
common stock of such corporation; provided, however, that Non-Convertible
Capital Stock will not include any Redeemable Stock or Exchangeable Stock.
"Non-Recourse Debt" means Debt or that portion of Debt (i) as to
which neither Products Corporation nor its Subsidiaries (other than a
Non-Recourse Subsidiary) (A) provide credit support (including any
undertaking, agreement or instrument which would constitute Debt), (B) is
directly or indirectly liable or (C) constitute the lender and (ii) no
default with respect to which (including any rights which the holders
thereof may have to take enforcement action against the assets of a
Non-Recourse Subsidiary) would permit (upon notice, lapse of time or both)
any holder of any other Debt of Products Corporation or its Subsidiaries
(other than Non-Recourse Subsidiaries) to declare a default on such other
Debt or cause the payment thereof to be accelerated or payable prior to its
Stated Maturity.
"Non-Recourse Subsidiary" means a Subsidiary of Products
Corporation (i) which has been designated as such by Products Corporation,
(ii) which has no Debt other than Non-Recourse Debt and (iii) which is in
the same line of business as Products Corporation and its Wholly Owned
Recourse Subsidiaries existing on the Issue Date or in businesses
reasonably related thereto.
"Obligations" means (a) the full and punctual payment of principal
of and interest on the New Notes when due, whether at maturity, by
acceleration, by redemption or otherwise, and all other monetary
obligations of the Issuer under the Indenture and the New Notes and (b) the
full and punctual performance of all other obligations of the Issuer under
the Indenture and the New Notes.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Issuer.
"Officers' Certificate" means a certificate signed by the Chairman
of the Board, Vice Chairman, the President or a Vice President (regardless
of Vice Presidential designation), and by the Treasurer, an Assistant
Treasurer, Secretary or an Assistant Secretary, of the Issuer, and
delivered to the Trustee. The principal executive, financial or accounting
officer of the Issuer will be one of the Officers signing an Officers'
Certificate given pursuant to the requirement for a Compliance Certificate
as described in the last paragraph under "Defaults" above.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee. The counsel may be an employee of
or counsel to the Issuer (or its parent or one of its Subsidiaries) or the
Trustee.
"Permitted Affiliate" means any individual that is a director or
officer of the Issuer, of REV Guarantor, of Revlon, Inc., of a Subsidiary
of Revlon, Inc. or of an Unrestricted Affiliate; provided, however, that
such individual is not also a director or officer of Mafco Holdings or any
person that controls Mafco Holdings.
"Permitted Transactions" means any transaction or series of similar
transactions (including the purchase, sale, lease or exchange of any
property or the rendering of any service) between the Issuer, REV
Guarantor, Revlon, Inc., Products Corporation or any Subsidiary of Products
Corporation, on the one hand, and any Affiliate of the Issuer or any legal
or beneficial owner of 10% or more of the voting power of Voting Stock of
the Issuer or an Affiliate of any such owner, on the other hand, existing
on, or pursuant to an agreement in effect on, the Issue Date and disclosed
in a schedule to the Indenture and any amendments thereto which do not
adversely affect the rights of the holders of the New Notes and any Tax
Sharing Agreement.
"person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however
designated) which is preferred as to the payment of dividends, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such corporation, over shares of Capital Stock of any other
class of such corporation.
"principal" of a New Note as of any date means the principal of the
New Note as of such date.
"Products Corporation Indentures" means the Senior Notes Indenture,
dated as of February 1, 1998, the Senior Subordinated Notes Indenture dated
as of February 1, 1998, and the Indenture dated as of November 6, 1998,
each between Products Corporation and the trustee thereunder, and in each
case as in effect on the Issue Date; provided, however, for purposes of
interpreting provisions of the Indenture that refer to the Products
Corporation Indentures, the provisions of the Products Corporation
Indentures (but not the Debt issued thereunder) will be deemed to be in
effect whether or not such Indentures have been discharged.
"Redeemable Stock" means any Capital Stock that by its terms or
otherwise is required to be redeemed on or prior to the first anniversary
of the Stated Maturity of the New Notes or is redeemable at the option of
the holder thereof at any time on or prior to the first anniversary of the
Stated Maturity of the New Notes.
"Refinance" means, in respect of any Debt, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue Debt
in exchange or replacement for, such Debt. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Costs" means, with respect to any Debt or Preferred
Stock being Refinanced, any premium actually paid thereon and reasonable
costs and expenses, including underwriting discounts, in connection with
such Refinancing; provided, that if any Debt issued in connection with such
a Refinancing is issued at a discount, Refinancing Costs shall be an amount
equal to the accreted value (as of the Stated Maturity of the Debt being
Refinanced) of the portion of such Debt used to pay such premiums, costs
and expenses.
"Restricted Payment" means, as to any person making a Restricted
Payment, (i) any dividend or any distribution on or in respect of the
Capital Stock of such person (including any payment in connection with any
merger or consolidation involving such person) or to the holders of the
Capital Stock of such person (except dividends or distributions payable
solely in the Non-Convertible Capital Stock of such person or in options,
warrants or other rights to purchase the Non-Convertible Capital Stock of
such person), (ii) any purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Issuer or of any direct or
indirect parent of the Issuer or (iii) any Investment in (A) any Affiliate
of the Issuer other than a Subsidiary of the Issuer and other than an
Affiliate of the Issuer which will become a Subsidiary of the Issuer as a
result of any such Investment, or (B) a Non-Recourse Subsidiary or (C) an
Unrestricted Subsidiary.
"Revlon, Inc. Nonpledged Shares" means the Capital Stock of Revlon,
Inc. that does not constitute Revlon, Inc. Collateral.
"Secured Non-Recourse Guarantee" means any Guarantee by the Issuer
or an Unrestricted Subsidiary of obligations of any other Person in respect
of which Guarantee the holders thereof have no recourse to any assets of
the Issuer or its Subsidiaries, other than Unrestricted Assets.
"Significant Subsidiary" means any Subsidiary (other than a
Non-Recourse Subsidiary and other than an Unrestricted Subsidiary) of the
Issuer which at the time of determination either (A) had assets which, as
of the date of Products Corporation's most recent quarterly consolidated
balance sheet, constituted at least 5% of Products Corporation's total
assets on a consolidated basis as of such date, in each case determined in
accordance with generally accepted accounting principles, or (B) had
revenues for the 12-month period ending on the date of Products
Corporation's most recent quarterly consolidated statement of income which
constituted at least 5% of Products Corporation's total revenues on a
consolidated basis for such period, or (iii) any Subsidiary of the Issuer
(other than a Non-Recourse Subsidiary and other than an Unrestricted
Subsidiary) which, if merged with all Defaulting Subsidiaries (as defined
below) of the Issuer, would at the time of determination either (A) have
had assets which, as of the date of Products Corporation's most recent
quarterly consolidated balance sheet, would have constituted at least 10%
of Products Corporation's total assets on a consolidated basis as of such
date or (B) have had revenues for the 12-month period ending on the date of
Products Corporation's most recent quarterly consolidated statement of
income which would have constituted at least 10% of Products Corporation's
total revenues on a consolidated basis for such period (each such
determination being made in accordance with generally accepted accounting
principles). "Defaulting Subsidiary" means any Subsidiary of the Issuer
(other than a Non-Recourse Subsidiary and other than an Unrestricted
Subsidiary) with respect to which an event described under clause (vi),
(vii) or (viii) of "Defaults" above has occurred and is continuing.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency).
"Subsidiary" means, with respect to any person, any corporation,
association, partnership or other business entity of which more than 50% of
the total voting power of shares of Capital Stock or other interests
(including partnership interests) entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned, directly or indirectly,
by (i) such person, (ii) such person and one or more Subsidiaries of such
person or (iii) one or more Subsidiaries of such person.
"Tax Sharing Agreements" means (i) that certain agreement dated
June 24, 1992, as amended, among Revlon Holdings, Inc., Products
Corporation, certain of its Subsidiaries, Revlon, Inc. and Mafco Holdings
and (ii) any other tax allocation agreement between the Issuer or any of
its Subsidiaries with the Issuer, Revlon, Inc., Products Corporation or any
direct or indirect shareholder of the Issuer with respect to consolidated
or combined tax returns including the Issuer or any of its Subsidiaries but
only to the extent that amounts payable from time to time by the Issuer or
any such Subsidiary under any such agreement do not exceed the
corresponding tax payments that the Issuer or such Subsidiary would have
been required to make to any relevant taxing authority had the Issuer or
such Subsidiary not joined in such consolidated or combined returns, but
instead had filed returns including only the Issuer or its Subsidiaries
(provided that any such agreement may provide that, if the Issuer or any
such Subsidiary ceases to be a member of the affiliated group of
corporations of which Mafco Holdings is the common parent for purposes of
filing a consolidated federal income tax return (such cessation, a
"Deconsolidation Event"), then the Issuer or such Subsidiary will indemnify
such direct or indirect shareholder with respect to any federal, state or
local income, franchise or other tax liability (including any related
interest, additions or penalties) imposed on such shareholder as the result
of an audit or other adjustment with respect to any period prior to such
Deconsolidation Event that is attributable to the Issuer, such Subsidiary
or any predecessor business thereof (computed as if the Issuer, such
Subsidiary or such predecessor business, as the case may be, were a
stand-alone entity that filed separate tax returns as an independent
corporation), but only to the extent that any such tax liability exceeds
any liability for taxes recorded on the books of the Issuer or such
Subsidiary with respect to any such period).
"Trustee" means the party named as such in the Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial
Code as in effect from time to time.
"Unrestricted Affiliate" means a person (other than a Subsidiary of
the Issuer) controlled (as defined in the definition of an "Affiliate") by
the Issuer, in which no Affiliate of the Issuer (other than (w) a
wholly-owned Subsidiary of the Issuer, REV Guarantor or Revlon, Inc, (x) a
Wholly Owned Recourse Subsidiary of Products Corporation, (y) a Permitted
Affiliate and (z) another Unrestricted Affiliate) has an Investment.
"Unrestricted Assets" means (i) the Revlon, Inc. Nonpledged Shares,
(ii) Capital Stock of Unrestricted Subsidiaries and (iii) all dividends,
cash and other property and proceeds (including proceeds of sale) from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any of the foregoing.
"Unrestricted Subsidiary" means a Subsidiary of the Issuer, other
than REV Guarantor or Revlon, Inc. or any of its Subsidiaries, which (i) is
acquired or organized by the Issuer or any other Unrestricted Subsidiary
(or any combination of the foregoing), (ii) is capitalized only with
Unrestricted Assets and (iii) does not have any Debt (A) which is held by
the Issuer, (B) as to which the Issuer or any of its Subsidiaries (other
than an Unrestricted Subsidiary) have provided credit support (other than
any Secured Non-Recourse Guarantee) or (C) any default as to which would
permit any holder (whether upon notice, after lapse of time or both) of any
Debt of the Issuer or any of its Subsidiaries (other than an Unrestricted
Subsidiary) to declare a default on such Debt or to cause the payment
thereof to be accelerated prior to its Stated Maturity.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof)
for the payment of which the full faith and credit of the United States of
America is pledged and which are not callable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock
of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Recourse Subsidiary" means a Subsidiary of Products
Corporation (other than a Non-Recourse Subsidiary) all the Capital Stock of
which (other than directors' qualifying shares) is owned by (i) Products
Corporation, (ii) Products Corporation and one or more Wholly Owned
Recourse Subsidiaries or (iii) one or more Wholly Owned Recourse
Subsidiaries.
"Withdrawn Collateral" means any Withdrawn Shares, together with
any cash, instruments or other Collateral which are released from the Lien
of the Indenture.
"Withdrawn Shares" means any Pledged Shares which are released from
the Lien of the Indenture as provided under "Collateral" above.
BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the New Notes will initially be issued
in the form of one or more registered Notes in global form without coupons
(each a "Global Note"). Each Global Note will be deposited with, or on
behalf of, DTC and registered in the name of Cede & Co., as nominee of DTC,
or will remain in the custody of the Trustee pursuant to the FAST Balance
Certificate Agreement between DTC and the Trustee.
DTC has advised the Issuer that it is (i) a limited purpose trust
company organized under the laws of the State of New York, (ii) a member of
the Federal Reserve System, (iii) a "clearing corporation" within the
meaning of the Uniform Commercial Code, as amended, and (iv) a "Clearing
Agency" registered pursuant to Section 17A of the Exchange Act. DTC was
created to hold securities for its participating organizations
(collectively, the "Participants") and facilitates the clearance and
settlement of securities transactions between Participants through
electronic book-entry changes to the accounts of its Participants, thereby
eliminating the need for physical transfer and delivery of certificates.
DTC's Participants include securities brokers and dealers (including the
Initial Purchasers), banks and trust companies, clearing corporations and
certain other organizations. Access to DTC's system is also available to
other entities such as banks, brokers, dealers and trust companies
(collectively, the "Indirect Participants") that clear through or maintain
a custodial relationship with a Participant, either directly or indirectly.
Holders who are not Participants may beneficially own securities held by or
on behalf of the Depository only through Participants or Indirect
Participants.
The Issuer expects that pursuant to procedures established by DTC
(i) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the Initial Purchasers with an interest in the
Global Note and (ii) ownership of the New Notes will be shown on, and the
transfer of ownership thereof will be effected only through, records
maintained by DTC (with respect to the interest of Participants), the
Participants and the Indirect Participants. The laws of some states require
that certain persons take physical delivery in definitive form of
securities that they own and that security interest in negotiable
instruments can only be perfected by delivery of certificates representing
the instruments. Consequently, the ability to transfer Notes or to pledge
the New Notes as collateral will be limited to such extent.
So long as DTC or its nominee is the registered owner of a Global
Note, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the New Notes represented by the Global Note for all
purposes under the Indenture. Except as provided below, owners of
beneficial interests in a Global Note will not be entitled to have Notes
represented by such Global Note registered in their names, will not receive
or be entitled to receive physical delivery of certificated securities (the
"Certificated Securities"), and will not be considered the owners or
Holders thereof under the Indenture for any purpose, including with respect
to giving of any directions, instruction or approval to the Trustee
thereunder. As a result, the ability of a person having a beneficial
interest in Notes represented by a Global Note to pledge or transfer such
interest to persons or entities that do not participate in DTC's system or
to otherwise take action with respect to such interest, may be affected by
the lack of a physical certificate evidencing such interest.
Accordingly, each holder owning a beneficial interest in a Global
Note must rely on the procedures of DTC and, if such holder is not a
Participant or an Indirect Participant, on the procedures of the
Participant through which such holder owns its interest, to exercise any
rights of a holder of New Notes under the Indenture or such Global Note.
The Issuer understands that under existing industry practice, in the event
the Issuer requests any action of holders of New Notes or a holder that is
an owner of a beneficial interest in a Global Note desires to take any
action that DTC, as the holder of such Global Note, is entitled to take,
DTC would authorize the Participants to take such action and the
Participant would authorize holders owning through such Participants to
take such action or would otherwise act upon the instruction of such
holders. Neither the Issuer nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of New Notes by DTC, or for maintaining, supervising or reviewing
any records of DTC relating to such New Notes.
Payments with respect to the principal of, premium, if any, and
interest on, any New Notes represented by a Global Note registered in the
name of DTC or its nominee on the applicable record date will be payable by
the Trustee to or at the direction of DTC or its nominee in its capacity as
the registered holder of the Global Note representing such New Notes under
the Indenture. Under the terms of the Indenture, the Issuer and the Trustee
may treat the persons in whose names the New Notes, including the Global
Notes, are registered as the owners thereof for the purpose of receiving
such payment and for any and all other purposes whatsoever. Consequently,
neither the Issuer nor the Trustee has or will have any responsibility or
liability for the payment of such amounts to beneficial owners of interest
in the Global Note (including principal, premium, if any, and interest), or
to immediately credit the accounts of the relevant Participants with such
payment, in amounts proportionate to their respective holdings in principal
amount of beneficial interest in the Global Note as shown on the records of
DTC. Payments by the Participants and the Indirect Participants to the
beneficial owners of interests in the Global Note will be governed by
standing instructions and customary practice and will be the responsibility
of the Participants or the Indirect Participants and DTC.
CERTIFICATED SECURITIES
If (i) the Issuer notifies the Trustee in writing that DTC is no
longer willing or able to act as a depository or DTC ceases to be
registered as a clearing agency under the Exchange Act and the Issuer is
unable to locate a qualified successor within 90 days, (ii) the Issuer, at
its option, notifies the Trustee in writing that it elects to cause the
issuance of New Notes in definitive form under the Indenture or (iii) upon
the occurrence of certain other events, then, upon surrender by DTC of its
Global Notes, Certificated Securities will be issued to each person that
DTC identifies as the beneficial owner of the New Notes represented by the
Global Notes. Upon any such issuance, the Trustee is required to register
such Certificated Securities in the name of such person or persons (or the
nominee of any thereof), and cause the same to be delivered thereto.
Neither the Issuer nor the Trustee shall be liable for any delay by
DTC or any Participant or Indirect Participant in identifying the
beneficial owners of the related Notes and each such person may
conclusively rely on, and shall be protected in relying on, instructions
from DTC for all purposes (including with respect to the registration and
delivery, and the respective principal amounts, of the New Notes to be
issued).
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain anticipated U.S.
federal income tax consequences to holders whose old notes are tendered and
accepted in the exchange offer. Because the law with respect to certain
federal income tax consequences of the exchange offer is uncertain and no
ruling has been or will be requested from the Internal Revenue Service
("Service") on any tax matter concerning the exchange offer, no assurances
can be given that the Service or a court considering these issues would
agree with the positions or conclusions discussed below.
This summary is based on laws, regulations, rulings and decisions
now in effect, all of which are subject to change (which change could apply
retroactively). This summary does not discuss all aspects of federal income
taxation that may be relevant to a particular investor or to certain types
of investors that may be subject to special tax rules (such as banks,
tax-exempt entities, insurance companies, S Corporations, dealers in
securities or currencies, traders in securities electing to mark to market,
persons that will hold the new notes as a position in a "straddle" or
conversion transaction, or as part of a "synthetic security" or other
integrated financial transaction, persons that have a "functional currency"
other than the U.S. dollar). The discussion is limited to exchanging
holders who are citizens or residents of the United States or domestic
corporations or that otherwise are subject to U.S. federal income taxation
on a net income basis with respect to the old notes and who have held the
old notes as "capital assets" within the meaning of section 1221 of the
Internal Revenue Code of 1986 as amended (the "Code").
HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
CONSEQUENCES TO THEM OF THE EXCHANGE, INCLUDING THE APPLICABILITY AND
EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
TAX CONSEQUENCES TO EXCHANGING HOLDERS
General. The exchange of the old notes for the new notes will
qualify as a tax-free recapitalization under Section 368(a)(1)(E) of the
Code with the result that, except as discussed below, (i) no gain or loss
will be recognized by an exchanging holder, (ii) the new notes will have an
initial tax basis in the hands of the exchanging holder equal to the tax
basis of the old notes exchanged therefor, and (iii) the new notes will
have a holding period that includes the period during which the exchanging
holder held the old notes.
Original Issue Discount-New Notes. The new notes will be treated as
issued with original issue discount within the meaning of the Code if (and
to the extent that) the stated redemption price at maturity of such new
notes exceed their "issue price." Under a de minimis exception, original
issue discount will be deemed not to exist with respect to the new notes if
the excess of the stated redemption price over their issue price is less
than .25% of the stated redemption price multiplied by the number of
complete years to maturity. A holder (whether or not such holder is a cash
or accrual basis taxpayer) will be required to include original issue
discount in gross income as it accrues, in accordance with a constant yield
to maturity method over the period the new note is held (in addition to the
inclusion of qualified stated interest, if any). The issue price of the new
notes will be their principal amount. The stated redemption price at
maturity of a new note generally will equal the sum of the principal amount
of such new note and all payments required to be made thereunder, other
than payments of "qualified stated interest" (defined generally as stated
interest that is unconditionally payable at least annually at a single
fixed rate that appropriately takes into account the length of intervals
between payments).
Market Discount. Market discount rules will apply to any new notes
received by an exchanging holder who acquired its old notes subsequent to
their original issuance at a price lower (by more than a de minimis amount)
than the stated redemption price at maturity of such old notes. A new note
that is exchanged for an old note with market discount will continue to
accrue market discount over its term.
Holders exchanging market discount old notes pursuant to the
exchange offer will not recognize any gain or loss upon the exchange with
respect to accrued market discount. Any gain recognized by the holder on
the disposition of new notes received in exchange for old notes having
market discount will generally be treated as ordinary income to the extent
of the market discount accrued while held by such holder. A holder of a
debt instrument acquired at a market discount must include market discount
in gross income as such market discount accrues on a straight-line basis
unless such holder elects to use a constant interest rate basis. A holder
may elect to include market discount in income currently. This current
inclusion election, once made, applies to all market discount obligations
acquired on or after the first day of the first taxable year in which the
election applies and may not be revoked without the consent of the Service.
Unless the holder elects to include market discount in income on a current
basis, as described above, the holder could be required to defer the
deduction of a portion of the interest paid on any indebtedness incurred or
maintained to purchase or carry market discount old notes.
Acquisition Premium. If the tax basis of a holder in a new note
exceeds the issue price of such new note but is not more than the principal
amount of such new note, the full daily portions of original issue discount
will still be reported for each holder of such new note for information
reporting purposes, but the exchanging holder will reduce each daily
portion of original issue discount includible in the holder's gross income
by a constant fraction calculated so as to cause the full amount of such
excess to be amortized over the life of such new note.
Sale or Exchange of New Notes. In general, subject to the rules
discussed above under "Market Discount," and except in certain
circumstances in the case of a redemption where a holder's percentage stock
interest is not meaningfully reduced, the sale, exchange or redemption of
the new notes will result in capital gain or loss equal to the difference
between the amount realized and the exchanging holder's adjusted tax basis
in the new notes immediately before such sale, exchange or redemption
(which will reflect any original issue discount and market discount
previously included in income).
Backup Withholding. Under the backup withholding rules, interest
and dividends otherwise payable to a holder of new notes and the proceeds
from any disposition of such property may be subject to backup withholding
at the rate of 31% unless the exchanging holder (i) is a corporation or
comes within certain other exempt categories and, demonstrates that fact
when required, or (ii) provides a correct taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance
of the new notes will be passed upon for REV Holdings by Skadden, Arps,
Slate, Meagher & Flom LLP, New York, New York. Skadden, Arps, Slate,
Meagher & Flom LLP has acted as counsel for REV Holdings in connection with
the exchange offer. Skadden, Arps, Slate, Meagher & Flom LLP has from time
to time represented, and may continue to represent, MacAndrews & Forbes and
certain of its affiliates (including REV Holdings, Revlon, Inc. and
Products Corporation) in connection with certain legal matters.
EXPERTS
Our consolidated financial statements and the related financial
statement schedule, as of December 31, 1999 and 1998, and for each of the
years in the three-year period ended December 31, 1999, have been
incorporated by reference herein and in the Registration Statement in
reliance upon the reports of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT
WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL, OR
A SOLICITATION OF AN OFFER TO BUY, ANY OF THE NOTES TO ANY PERSON OR BY
ANYONE IN ANY JURISDICTION WHERE IT IS UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE USING THE PROSPECTUS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED IN
THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO IS CORRECT AFTER THE DATE
HEREOF OR THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE
HEREOF.
---------------
TABLE OF CONTENTS
PAGE
Where You May Find More Information...........................................
Incorporation of Documents by Reference.......................................
Prospectus Summary............................................................
Risk Factors..................................................................
Use of Proceeds...............................................................
Capitalization................................................................
Selected Financial Data.......................................................
The Exchange Offer............................................................
Description of New Notes......................................................
Book-entry; Delivery and Form.................................................
Certain U.S. Federal Income Tax Consequences .................................
Legal Matters.................................................................
Experts ......................................................................
Annex A - REV Holdings Inc. Annual Report on Form 10-K for the fiscal year
ended December 31, 1999
Annex B - REV Holdings Inc. Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000
REV HOLDINGS INC.
12% SENIOR SECURED NOTES
DUE 2004
----------------
PROSPECTUS
----------------
, 2000
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
(the "Delaware Corporation Law") empowers a Delaware corporation to
indemnify any persons who are, or are threatened to be made, parties to any
threatened, pending or completed legal action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by
or in the right of such corporation), by reason of the fact that such
person is or was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise. The indemnity may include
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be
in or not opposed to the corporation's best interests, and, for criminal
proceedings, had no reasonable cause to believe his conduct was unlawful. A
Delaware corporation may indemnify officers and directors against expenses
(including attorneys' fees) in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged
to be liable to the corporation. Where an officer or director is successful
on the merits or otherwise in the defense of any action referred to above,
the corporation must indemnify him against the expenses which such officer
or director actually and reasonably incurred.
The by-laws of the Registrants allow the Registrants to maintain
director and officer liability insurance on behalf of any person who is or
was a director or officer of such Registrant or such person who serves or
served as a director, officer, employee or agent, of another corporation,
partnership or other enterprise at the request of such Registrant. The
by-laws of the Registrants provide for indemnification of the officers and
directors of such Registrant to the fullest extent permitted by applicable
law.
Pursuant to Section 102(b)(7) of the Delaware Corporation Law, the
certificates of incorporation of the Registrants provide that no director
of any Registrant shall be personally liable to such Registrant or its
shareholders for monetary damages for any breach of his fiduciary duty as a
director; provided, however, that such clause shall not apply to any
liability of a director (1) for any breach of the Director's duty of
loyalty to the Registrant or its stockholders, (2) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of the law, (3) pursuant to Section 174 of the Delaware
Corporation Law, or (4) for any transaction from which the director derived
an improper personal benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
EXHIBIT NO. DESCRIPTION
4 Instruments Defining the Rights
of Security Holders, including
Indentures.
4.1 Indenture, dated as of
February 1, 1998, between
Revlon Escrow and U.S. Bank
Trust National Association
(formerly known as First
Trust National Association),
as Trustee, relating to the 8
1/8% Senior Notes due 2006
(the "8 1/8% Senior Notes
Indenture"). (Incorporated by
reference to Exhibit 4.1 to
the Registration Statement on
Form S-1 of Products
Corporation filed with the
Commission on March 12, 1998,
File No. 333-47875) (the
"Products Corporation 1998
Form S-1")).
4.2 Indenture, dated as of
February 1, 1998, between
Revlon Escrow and U.S. Bank
Trust National Association
(formerly known as First
Trust National Association),
as Trustee, relating to the 8
5/8% Senior Notes Due 2006
(the "8 5/8% Senior Subordinated
Notes Indenture"). (Incorporated
by reference to Exhibit 4.3 to
the Products Corporation 1998
Form S-1).
4.3 First Supplemental Indenture,
dated April 1, 1998, among
Products Corporation, Revlon
Escrow, and the Trustee,
amending the 8 1/8% Senior
Notes Indenture.
(Incorporated by reference to
Exhibit 4.2 to the Products
Corporation 1998 Form S-1).
4.4 First Supplemental Indenture,
dated March 4, 1998, among
Products Corporation, Revlon
Escrow, and the Trustee,
amending the 8 5/8% Senior
Subordinated Notes Indenture.
(Incorporated by reference to
Exhibit 4.4 to the Products
Corporation 1998 Form S-1).
4.5 Indenture, dated as of
November 6, 1998, between
Products Corporation and U.S.
Bank Trust National
Association, as Trustee,
relating to Products
Corporation's 9% Senior Notes
due 2006. (Incorporated by
reference to Exhibit 4.13 to
the Quarterly Report on Form
10-Q for the quarterly period
ended September 30, 1998 of
Revlon, Inc. (the "Revlon
1998 Third Quarter Form
10-Q")).
4.6 Amended and Restated Credit
Agreement, dated as of May
30, 1997, among Products
Corporation, The Chase
Manhattan Bank, Citibank
N.A., Lehman Commercial Paper
Inc., Chase Securities Inc.
and the lenders party thereto
(the "Credit Agreement").
(Incorporated by reference to
Exhibit 4.23 to Amendment No.
2 to the Registration
Statement on Form S-1 of
Revlon Worldwide (Parent)
Corporation, filed with the
Commission on June 26,1997,
File No. 33-23451).
4.7 First Amendment, dated as of
January 29, 1998, to the
Credit Agreement.
(Incorporated by reference to
Exhibit 4.8 to the Annual
Report on Form 10-K for the
year ended December 31, 1997
of Revlon, Inc. (the "Revlon
1997 10-K")).
4.8 Second Amendment, dated as of
November 6, 1998, to the
Credit Agreement.
(Incorporated by reference to
Exhibit 4.12 to the Revlon
1998 Third Quarter Form
10-Q).
4.9 Third Amendment, dated as of
December 23, 1998, to the
Credit Agreement.
(Incorporated by reference to
Exhibit 4.12 to Amendment No.
1 to the Products Corporation
1998 Form S-4 as filed with
the Commission on January 22,
1999, File No. 33-69213).
4.10 Fourth Amendment, dated as of
November 10, 1999, to the
Credit Agreement.
(Incorporated by reference to
Exhibit 4.12 to the Quarterly
Report on Form 10-Q for the
quarterly period ended
September 30, 1999 of Revlon,
Inc. (the "Revlon 1999 Third
Quarter Form 10-Q")).
4.11 Indenture, dated as of March
1, 1997, between REV Holdings
(formerly Revlon Worldwide
(Parent) Corporation) and The
Bank of New York, as Trustee,
relating to the Senior
Secured Discount Notes due
2001 and the Series B Senior
Secured Discount Notes due
2001. (Incorporated by
reference to Exhibit 4.1 to
the Worldwide 1997 Form S-1).
4.12 Fifth Amendment, dated as of
March 6, 2000, to the Credit
Agreement. (Incorporated by
reference to Exhibit 10.20 to
the Quarterly Report on Form
10-Q for the quarterly period
ended March 31,2000 of
Revlon, Inc. (the "Revlon,
Inc. March 31, 2000 Form
10-Q")).
4.13 Sixth Amendment, dated as of
September 8, 2000, to the
Credit Agreement.
(Incorporated by reference to
Exhibit 10.24 to the Revlon,
Inc. March 31, 2000 Form
10-Q).
4.14 Form of Indenture between REV
Holdings and ____________, as
Trustee, relating to the 12%
Senior Secured Notes due
2004.
4.15 Form of Non-Recourse Guaranty
of REV Guarantor Corp.
*5.1 Opinion of Skadden, Arps,
Slate, Meagher & Flom LLP,
special counsel to the
Registrant.
10 Material Contracts.
10.1 Asset Transfer Agreement,
dated as of June 24, 1992,
among Revlon Holdings Inc.
("Holdings"), National Health
Care Group, Inc., Charles of
the Ritz Group Ltd., Products
Corporation and Revlon, Inc.
(Incorporated by reference to
Exhibit 10.1 to Amendment No.
1 to the Revlon, Inc.
Registration Statement on
Form S-1 filed with
Commission on June 29, 1992,
File No. 33-47100 (the
"Revlon 1992 Amendment No.
1")).
10.2 Tax Sharing Agreement, dated
as of June 24, 1992, among
Mafco Holdings, Revlon, Inc.,
Products Corporation and
certain subsidiaries of
Products Corporation (the
"Tax Sharing Agreement").
(Incorporated by reference to
Exhibit 10.5 to the Revlon
1992 Amendment No. 1).
10.3 First Amendment, dated as of
February 28, 1995, to the Tax
Sharing Agreement.
(Incorporated by reference to
Exhibit 10.5 to the Annual
Report on Form 10-K for the
year ended December 31, 1994
of Products Corporation).
10.4 Second Amendment, dated as of
January 1, 1997, to the Tax
Sharing Agreement.
(Incorporated by reference to
Exhibit 10.7 to the Annual
Report on Form 10-K for the
year ended December 31, 1996
of Revlon, Inc. (the "Revlon
1996 10-K")).
10.5 Second Amended and Restated
Operating Services Agreement
by and among Holdings,
Revlon, Inc. and Products
Corporation, as of January 1,
1996 (the "Operating Services
Agreement"). (Incorporated by
reference to Exhibit 10.8 to
the Revlon 1996 10-K).
10.6 Amendment to the Operating
Services Agreement, dated as
of July 1, 1997.
(Incorporated by reference to
Exhibit 10.10 to the Revlon
1997 10-K).
10.7 Employment Agreement dated as
of November 2, 1999 between
Products Corporation and
Jeffrey M. Nugent.
(Incorporated by reference to
Exhibit 10.10 to the Annual
Report on Form 10-K for the
year ended December 31, 1999
of Revlon, Inc. (the "Revlon
1999 10-K")).
10.8 Amended and Restated Revlon
Pension Equalization Plan,
amended and restated as of
December 14, 1998.
(Incorporated by reference to
Exhibit 10.15 to the Annual
Report on Form 10-K for year
ended December 31, 1998 of
Revlon, Inc.).
10.9 Executive Supplemental
Medical Expense Plan Summary
dated July 1991.
(Incorporated by reference to
Exhibit 10.18 to the
Registration Statement on
Form S-1 of Revlon, Inc.
filed with the Commission on
May 22, 1992, File No.
33-47100 (the "Revlon 1992
Form S-1")).
10.10 Description of Post
Retirement Life Insurance
Program for Key Executives.
(Incorporated by reference to
Exhibit 10.19 to the Revlon
1992 Form S-1).
10.11 Benefit Plans Assumption
Agreement dated as of July 1,
1992, by and among Holdings,
Revlon, Inc. and Products
Corporation. (Incorporated by
reference to Exhibit 10.25 to
the Products Corporation 1992
10-K).
10.12 Revlon Amended and Restated
Executive Deferred
Compensation Plan dated as of
August 6, 1999. (Incorporated
by reference to Exhibit 10.27
to the Revlon 1999 Third
Quarter Form 10-Q).
10.13 Revlon Executive Severance
Policy effective January 1,
1996. (Incorporated by
reference to Exhibit 10.23 to
the Amendment No. 3 to the
Registration Statement on
Form S-1 of Revlon, Inc.
filed with the Commission on
February 5, 1996, File No.
33-99558).
10.14 Revlon, Inc. Second Amended
and Restated 1996 Stock Plan
(Amended and Restated as of
February 12, 1999).
(Incorporated by reference to
Exhibit 4.1 to the
Registration Statement on
Form S-8 of Revlon, Inc.
filed with the Commission on
April 14, 1999, File No.
333-76267).
10.15 Purchase Agreement dated as
of February 18, 2000 by and
among Revlon, Inc., Products
Corporation, REMEA 2 B.V.,
Revlon Europe, Middle East
and Africa, Ltd., Revlon
International Corporation,
Europeenne de Produits de
Beaute S.A., Deutsche Revlon
GmbH & Co. K.G., Revlon
Canada, Inc., Revlon de
Argentina, S.A.I.C., Revlon
South Africa (Proprietary)
Limited, Revlon (Suisse)
S.A., Revlon Overseas
Corporation C.A., CEIL -
Comercial, Exportadora,
Industrial Ltda., Revlon
Manufacturing Ltd., Revlon
Belgium N.V., Revlon (Chile)
S.A., Revlon (Hong Kong)
Limited, Revlon, S.A., Revlon
Nederland B.V., Revlon New
Zealand Limited, European
Beauty Products S.p.A. and
Beauty Care Professional
Products Luxembourg, S.a.r.l.
(Incorporated by reference to
Exhibit 10.19 to the Revlon
1999 10-K).
10.16 Tax Sharing Agreement, dated
as of March 17, 1993, between
Revlon Worldwide Corporation
and Mafco Holdings.
(Incorporated by reference to
Exhibit 10.30 to the
Registration Statement on
Form S-1 of Revlon Worldwide
Corporation filed with the
Commission on April 2, 1993,
File No. 33-60488 (the
"Worldwide 1993 Form S-1")).
10.17 Indemnity Agreement, dated
March 25, 1993, between
Revlon Worldwide Corporation
and Holdings. (Incorporated
by reference to Exhibit 10.32
to the Worldwide 1993 Form
S-1).
10.18 Form of Registration Rights
Agreement. (Incorporated by
reference to Exhibit 10.1 to
the Annual Report on Form
10-K for the year ended
December 31, 1995 of Revlon
Worldwide Corporation).
10.19 Senior Executive Supplemental
Long-Term Incentive Program.
(Incorporated by reference to
Exhibit 10.21 to the Revlon,
Inc. March 31, 2000 Form
10-Q).
10.20 Employment Agreement amended
and restated as of May 9,
2000 between Products
Corporation and Douglas
Greeff. (Incorporated by
reference to Exhibit 10.22 to
the Quarterly Report on Form
10-Q for the quarterly period
ended June 30, 2000 of
Revlon, Inc. (the "Revlon,
Inc. June 30, 2000 Form
10-Q")).
10.21 Revlon Executive Bonus Plan
(Amended and Restated as of
March 1, 2000). (Incorporated
by reference to Exhibit 10.23
to the Revlon, Inc. June 30,
2000 Form 10-Q).
12.1 Statement regarding the
computation of ratio of
earnings to fixed charges for
the Registrant. 13.1 Form
10-Q of REV Holdings for the
Quarter ended September 30,
2000. (Incorporated herein by
Reference.)
23.1 Consent of KPMG LLP.
*23.2 Consent of Skadden, Arps,
Slate, Meagher & Flom LLP,
special counsel to the
Registrant (included in
Exhibit 5.1).
24.1 Power of Attorney of Ronald
O. Perelman.
24.2 Power of Attorney of Howard
Gittis.
24.3 Power of Attorney of Ronald
O. Perelman.
24.4 Power of Attorney of Howard
Gittis.
*25.1 Statement of Eligibility and
Qualification on Form T-1 of
____________, as Trustee
under the Indenture relating
to the Registrant's Senior
Secured Notes due 2004.
*27.1 Financial Data Schedule for
the period ended December 31,
1999.
*27.2 Financial Data Schedule for
the period ended September
30, 2000.
*99.1 Form of Letter of Transmittal.
*99.2 Form of Notice of Guaranteed
Delivery.
*99.3 Form of Letter to Brokers,
Dealers, Commercial Banks,
Trust Companies and Other
Nominees.
*99.4 Form of Letter to Clients.
*99.5 Form of Keepwell Agreement
between GSB Investments Corp.
and REV Holdings Inc.
*To be filed by amendment.
(b) Financial Statement Schedules:
Schedule II--Valuation and Qualifying Accounts.
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under
then Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrants hereby undertake:
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrants pursuant to the foregoing
provisions, or otherwise, the Registrants have been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than
the payment by the Registrants of expenses incurred or paid by a
director, officer or controlling person of the Registrants in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with
the securities being registered, the Registrants will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
(c) The undersigned Registrants hereby undertake to respond to requests
for information that is incorporated by reference into the
prospectus pursuant to Item 4, 10(b), 11, or 13 of this form,
within one business day of receipt of such request, and to send the
incorporated by first class mail or equally prompt means. This
includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of
responding to the request.
(d) The undersigned Registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement
when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, REV
Holdings Inc. has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
New York, State of New York, on December 14, 2000.
REV HOLDINGS INC.
By:/s/ Todd J. Slotkin
----------------------
Name: Todd J. Slotkin
Title: Executive Vice
President, Chief
Financial Officer and
Chief Accounting
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
* Chairman of the Board, Chief Executive December
------------------------------ and Director 14, 2000
Ronald O. Perelman (Principal Executive Officer)
* Vice Chairman of the Board and Director December
------------------------------ 14, 2000
Howard Gittis
Executive Vice President, Chief Financial December
/s/ Todd J. Slotkin Officer and Chief Accounting Officer 14, 2000
------------------------------
Todd J. Slotkin (Principal Financial and Accounting Officer)
</TABLE>
*Barry F. Schwartz, by signing his name hereto, does hereby execute this
Registration Statement on behalf of the directors and officers of the
Registrant indicated above by asterisks, pursuant to the Powers of Attorney
duly executed by such directors and officers as exhibits to the
Registration Statement.
By:/s/ Barry F. Schwartz
----------------------------
Barry F. Schwartz
Attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, REV
Guarantor Corp. has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
New York, State of New York, on December 14, 2000.
REV Guarantor Corp.
By:/s/ Todd J. Slotkin
-------------------------------
Name: Todd J. Slotkin
Title: Executive Vice
President, Chief
Financial Officer and
Chief Accounting
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
* Chairman of the Board, Chief Executive December
------------------------------ Officer and Director 14, 2000
Ronald O. Perelman (Principal Executive Officer)
* Vice Chairman of the Board and Director December
------------------------------ 14, 2000
Howard Gittis
Executive Vice President, Chief Financial December
/s/ Todd J. Slotkin Officer and Chief Accounting Officer 14, 2000
------------------------------
Todd J. Slotkin (Principal Financial and Accounting Officer)
</TABLE>
*Barry F. Schwartz, by signing his name hereto, does hereby execute this
Registration Statement on behalf of the directors and officers of the
Registrant indicated above by asterisks, pursuant to the Powers of Attorney
duly executed by such directors and officers as exhibits to the
Registration Statement.
By:/s/ Barry F. Schwartz
--------------------------
Barry F. Schwartz
Attorney-in-fact
