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2020 is “a perfect storm” for substance abuse and “it’s really scary”



Bloomberg

Perelman sells almost everything while a pandemic ravages his empire

(Bloomberg) – Bit by bit, billionaire Ronald O. Perelman is separating from his treasures. His Gulfstream 650 is on the market. Such is his 257-foot yacht. Moving companies brought boxes of art from his Upper East Side townhouse after he signed a deal with Sotheby̵

7;s to sell hundreds of millions of dollars of works. He dumped his stake in Humvee maker AM General and sold a flavor company he owned for decades and hired banks to find buyers for stocks he held in other companies. What on earth is wrong with Ron Perelman? His exploits on and off Wall Street have been tabloid in New York since the 1980s. But now, at an age when most fellow billionaires are sitting back, 77-year-old Perelman faces a number of financial challenges, most notably at Revlon Inc., its cosmetics giant. After he was touted as America’s richest man, his fortune has plummeted $ 19 billion to $ 4.2 billion over the past two years, according to the Bloomberg Billionaires Index. Banks, celebrities, and art collectors have raved about Perelman since its investment firm MacAndrews & Forbes announced in July that it would be overhauling its holdings in response to the coronavirus pandemic and the associated devastation of American businesses, including his own: “We are taking important steps fast taken to respond to the unprecedented economic environment we faced, ”Perelman said in a statement. “I’ve been very public about my intentions to reduce leverage, streamline operations, sell some assets and turn those assets into cash to look for new investment opportunities, and that’s exactly what we’re doing.” Read Ronald O. Perelman’s full statement here, Perelman also gave more prosaic reasons for the move, including spending time with his family during the lockdown and a desire for an easier life. “I realized that I had held onto too many things for far too long that I didn’t want to use or didn’t want to use,” he said. “I came to the conclusion that it was time for me to clean the house, simplify it, and allow others to enjoy some of the beautiful things I’ve acquired in decades.” Graydon Carter, former Vanity Fair editor who knows Perelman For three decades, the change in Perelman’s attitude has been sincere: “When people say something like that, it often masks something else. In Ronald’s case, it’s true, ”said Carter, who teamed up with Perelman to reopen the Monkey Bar in Midtown Manhattan. “He has learned to love and appreciate the civil comfort of family and home.” Carter described Perelman as a “charismatic swashbuckler” who once enjoyed the New York social evenings a little too much. But he said Perelman was now “crazy about spending time at home” with his fifth wife, Anna, a psychiatrist, and their two young sons. Richard Hack, who wrote an unauthorized biography of Perelman in 1996, is skeptical: “If you want a simpler life, you’re buying a farm in Oklahoma and not selling a painting from your Manhattan townhouse,” Hack said. “If he sells his art, it’s because he needs cash.” The art includes Jasper John’s “0 through 9” priced in the $ 70 million range, Gerhard Richter’s “Two Candles” which cost more than $ 50 million, and Cy Twombly’s “Leaving Paphos with Waves (I)” which was loud knowledgeable people found a buyer for about $ 20 million, asking not to be identified as private. “What he sells is as blue as it gets,” said Wendy Goldsmith, an art consultant in London. Some of the proceeds are said to be repaying loans from Citigroup Inc., according to people with knowledge of the arrangements. He also has loans from JPMorgan Chase & Co ., Bank of America Corp. and UBS Group AG in connection with its artwork, files show. These are not forced sales, said a Perelman spokeswoman. She also denied a New York Post story that “The Creeks” , who discreetly marketed his 57-acre East Hampton property, said he remains indebted to his considerable philanthropy, including building a performing arts center in the financial district, vice chairman of the Apollo Theater and serving on Columbia boards Business School and New York-Presbyterian Hospital Read more: Billionaire Perelman Tries To Reset The Empire To Get The New One World A notable twist for Perelman, long celebrated and feared for planning some of the most ambitious deals of the 1980s and 1990s, and for the litigation, divorce and corporate brawl that he left on the financial landscape, ”said investment banker Ken Moelis , a longtime Perelman consultant. But now one of the original pioneers of the Michael Milken-fueled era of junk bond issuance is realizing that there is too much debt – especially Revlon, which is at the center of his realm. His market value of $ 365 million is a whisper of the $ 1.74 billion he paid for the company in 1985. He owns approximately 87% of Revlon and has full control over the company, which is run by his daughter Debra Perelman. For decades it was strained under heavy debt, forcing Perelman to lend or raise funds as he switched executives to pursue various turnarounds. The billionaire made it clear in an interview with the Wall Street Journal that he “loved business” and that it defined him for better or for worse. Revlon, which was slow to respond to changing trends 20 years ago, has more recently lost sales to smaller beauty companies that used social media to lure customers. Now revenue continues to decline due to shop closings. The company has $ 3 billion in debt, some of its bonds trade at 14 cents the dollar, and the company faces a monetary crisis in November. A Revlon spokesman declined to comment. His problems aren’t just limited to lipstick. Perelman used his Revlon stock as collateral for MacAndrews & Forbes debt. Stocks are down 68% this year, a decline that would typically require lenders to ask for additional collateral or loan repayment. Shares in other companies in its portfolio, including Scientific Games Corp. and Vericast Corp., were also pledged against MacAndrews & Forbes debts. At least nine banks have claims against Perelman’s assets, including his art collection, the Hamptons house, and various aircraft. Approximately $ 267 million in mortgages are tied to the company’s Upper East Side Manhattan headquarters and other buildings it owns. Perelman has made progress on plans to sell some of its holdings. MacAndrews & Forbes signed a deal this week to sell their 35% stake in Scientific Games to an Australian investment firm. KPS Capital Partners agreed in July to purchase Perelman’s stake in AM General, the Indiana-based maker of Humvees and other vehicles, for an undisclosed amount. In June, a $ 439 million deal was closed to sell Flavors Holdings, a manufacturer of sweeteners and foods, to Whole Earth Brands Inc. However, further simplifying Perelman’s holdings might be easier said than done. Revlon’s $ 3 billion debt would be a concern for a potential buyer. And Vericast, a collection of marketing and payments companies, has struggled to keep up with the changes in the industry while dealing with its own significant debt burden. Two of the main sources of income are check printing and print-based advertising, both of which are in decline due to digital payments and online marketing. The RXSaver and RetailMeNot units are being purchased, indicating that it may be easier to sell the company in parts as a whole. A painting by Francis Bacon by Perelman, valued at $ 15 million to $ 23 million, was withdrawn from auction at the last minute due to lack of interest. The art collection, which contains some of the most valuable works of the 20th century, including sculptures by Alberto Giacometti and paintings by Mark Rothko and Ed Ruscha, is now responsible for more than a third of his fortune. There are signs that the turmoil is catching toll within MacAndrews & Forbes, where some of Perelman’s senior executives have quickly retired. General Counsel Steve Cohen resigned in July, followed by spokespersons Josh Vlasto and James Chin, who headed the capital markets group. CFO Paul Savas resigned in June due to anomalies in insurance payments of $ 5 million between Revlon and MacAndrews & Forbes. He has been replaced by Jeffrey Brodsky, who, according to his LinkedIn profile, “has an extensive background in crisis and turnaround management”. Still, those who know him well say that the recent stumbling blocks will not define him. “Ronald has been at the highest level in forty years,” said Moelis. “Even Michael Jordan missed a shot.” For more articles like this, visit bloomberg.com. Sign up now to stay up to date with the most trusted business news source. © 2020 Bloomberg LP


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