NEW YORK, March 1, 2016 /PRNewswire/ -- Avon Products, Inc.
("Avon") and Cerberus Capital
Management, L.P. ("Cerberus") today announced the close of their
strategic partnership transaction (previously announced on
December 17, 2015). This partnership
includes the separation of Avon's
North America business into a
privately-held company that is majority-owned and managed by an
affiliate of Cerberus. The North American business will operate
under the name New Avon LLC. Avon Products, Inc., comprised of the
remaining international markets, continues to trade on the New York
Stock Exchange under the ticker AVP.
Under the terms of the transaction, an affiliate of Cerberus
invested $435 million in Avon in exchange for Avon convertible perpetual preferred stock.
Assuming the conversion of the preferred stock to common stock at
the conversion price of $5.00 per
share, this equates to an ownership interest of approximately 16.6%
as of March 1, 2016. In addition,
Avon's North America business has been separated into
a privately-held entity, in which an affiliate of Cerberus has
invested $170 million for an
approximate 80% ownership interest. Avon maintains an approximate 20% interest in
New Avon LLC. For more details on the strategic partnership, please
visit investor.avoncompany.com.
"Our strategic partnership with Cerberus sets Avon on a solid path to profitability and
growth by providing a solution for the North America business as well as capital,
focus, and resources to support Avon Products, Inc. in the
execution of our transformation plan," said Sheri McCoy, Chief Executive Officer of
Avon. "The partnership, along with
other actions we are taking, also further increases our financial
flexibility. We have significant capital resources and liquidity
with which to fund working capital, restructuring costs, and
opportunistic debt retirement."
The company's cash position as of December 31, 2015, together with the net cash
proceeds from the transaction, totals approximately $1 billion.
"We are strong believers in the power of the Avon brand and the
direct-selling business model, and are confident we can be a
catalyst for improvement in both North American and the
international markets," said Steven F.
Mayer, Senior Managing Director and Co-Head of Global
Private Equity of Cerberus. "Having now spent months with the
company, its management team, its Representatives and its
Associates, we are even more enthusiastic about investing in the
North American Representatives and business. Our goal is to make
the direct-selling model and the Representative experience more
contemporary, efficient, and profitable by reinvigorating the Avon
brand, improving New Avon LLC's competitiveness, and positioning it
for long-term, sustainable growth."
As previously announced, upon today's closing, the Avon
Products, Inc. Board of Directors will now consist of Chan Galbato (non-executive Chairman),
W. Don Cornwell (lead independent
Director), Sheri McCoy, Nancy Killefer, Susan
Kropf, Steven Mayer,
Helen McCluskey, Charles Noski, and Michael Sanford, with two additional independent
directors to be jointly selected by Avon and Cerberus.
"I'm honored to be a part of the team that is creating
Avon's future," said Galbato,
Chief Executive Officer of Cerberus' affiliate Cerberus Operations
and Advisory Company, LLC. "This will be an exciting time for
Avon and all of its stakeholders
as the company begins to realize its full potential and continues
to grow its business in markets around the world."
Six Directors who had previously served on the Avon Board have stepped down: Douglas
Conant, Paula Stern, V. Ann Hailey, Maria Elena
Lagomasino, Sara Mathew and Gary Rodkin.
"I want to thank these directors for their service," said
Cornwell. "They have each served Avon and our shareholders well."
About Avon Products, Inc.
Avon is the
Company that for 130 years has proudly stood for beauty,
innovation, optimism and, above all, women. Avon products
include well-recognized and beloved brands such as ANEW, Avon
Color, Avon Care, Skin-So-Soft, and Advance Techniques. Sold
through nearly 6 million active independent Avon Sales
Representatives, Avon products delight consumers in
approximately 70 countries worldwide. Learn more
about Avon and its products
at www.avoncompany.com.
About Cerberus
Established in 1992, Cerberus is one
of the world's leading private investment firms. Cerberus has
approximately $30 billion under
management invested in four primary strategies: operational private
equity; real estate-related investments; commercial mid-market
lending, and distressed securities and assets. From its
headquarters in New York City and offices in the U.S.,
Europe and Asia, Cerberus has the on-the-ground presence,
including both investment personnel and members of its Operations
Team, to invest in multiple industry sectors, through multiple
investment strategies, in countries around the world.
Forward-Looking Statements
Statements in this release
that are not historical facts may be forward-looking statements
that involve risks and uncertainties that could cause actual
results to differ materially. These risks and uncertainties are
detailed from time to time in reports filed by Avon Products, Inc.
with the Securities and Exchange Commission, including Forms 8-K,
10-Q, and 10-K. Some forward-looking statements in this release
include and concern our business strategy and outlook. These
forward-looking statements involve risks, uncertainties and other
factors, which may cause the actual results, levels of activity,
performance or achievement of Avon
to be materially different from any future results expressed or
implied by such forward-looking statements. These risks and
uncertainties include, but are not limited to, our ability to
improve our financial and operational performance, our ability to
achieve the anticipated benefits of our strategic partnership with
Cerberus, the impact of a continued decline in our business
results, the possibility of business disruption, competitive
uncertainties, and general economic and business conditions in our
markets, including fluctuations in foreign currency exchange rates.
Any forward-looking statements speak only as of the date they are
made. The Company does not undertake to update any such
forward-looking statements.
CONTACTS:
MEDIA:
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INVESTORS:
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Brunswick
Group
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Adam
Zerfass
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Radina
Russell
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212-282-5320
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212-333-3810
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For Cerberus Capital
Management:
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Chip Smith
646-885-3756
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Liz Micci
646-495-2702
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SOURCE Avon Products, Inc.