THE WHAT? Coty has announced that it now expects to receive a shareholder distribution of US$250 million at a minimum from its equity stake in Wella, significantly above the previously announced US$175 million.
THE DETAILS The US beauty behemoth expects to receive this shareholder distribution in the next two months and intends to use it, plus extra cash on the balance sheet to redeem its 2023 €550 million unsecured bonds in full, after the bond call premium drops to pay on April 15, 2022.
THE WHY? The upsized shareholder distribution is due to Wella finalizing the intended use of proceeds from its recent refinancing.
Sue Y. Nabi, Coty’s Chief Executive Officer, stated, “Deleveraging our balance sheet remains a key priority at Coty and a driver of further value expansion. Following our strong deleveraging progress during 2Q22, the expected upsized shareholder distribution from Wella should be a meaningful step in the further reduction of debt.
While we continue to monitor global market conditions, I am very encouraged by our LFL revenue trends quarter-to-date. We remain confident in our guidance for mid-teens LFL sales growth in 3Q22, assuming no significant deterioration in the demand backdrop. This is further evidence that our decision to step-up marketing reinvestment in 2Q22 is having the intended effect of accelerating our sales growth, and is an additional proof point of the virtuous cycle we have created.”