It was hardly the role Citigroup Inc.’s bankers signed up for when they helped Ron Perelman’s Revlon Inc. borrow US$1.8 billion in 2016. But, now a back-office blunder is leaving the financial behemoth faced with the prospect of becoming one of the biggest creditors to the troubled cosmetics empire.
A surprise ruling by a New York judge on Tuesday blocked Citigroup’s efforts to recover US$500 million it had mistakenly sent Revlon’s lenders last year as the so-called administrative agent on the company’s loan. While the bank says it will appeal the decision, a failure to overturn it will leave Citigroup holding the bag on the bulk of the US$900 million remaining on the loan that Revlon hasn’t itself paid.
“Revlon’s loan was never paid off. So if appeals fail, Citi will ultimately step into the shoes of the lenders and own US$500 million of that nearly US$900 million term loan.” said Philip Brendel, a senior distressed debt analyst at Bloomberg Intelligence.
Author(s): Katherine Doherty, Bloomberg News
Publication Date: 17 February 2021
Publication Site: Bloomberg