Coty wipes $250m off debts from Wella sale

By Becky Bargh | Published: 2-Mar-2022

The shareholder distribution reflects a $75m increase on the expected sum

Coty, the beauty owner of CoverGirl and Rimmel London, has secured a US$250m shareholder distribution from its equity stake in Wella.

This represents a $75m increase on the expected amount.

Hitting Coty’s bank balance in the next two months, the cosmetics giant will use the proceeds to wipe off some of its debts and accelerate progress to reach its 2022 leverage target.

“Deleveraging our balance sheet remains a key priority at Coty and a driver of further value expansion,” said Coty’s CEO Sue Nabi.

“Following our strong deleveraging progress during [Q2 22], the expected upsized shareholder distribution from Wella should be a meaningful step in the further reduction of debt.”

Coty’s net debt stood at $4.45bn at the end of 2021’s calendar year.

Nabi added: “While we continue to monitor global market conditions, I am very encouraged by our [like-for-like] revenue trends quarter-to-date.”

The founder of Orveda – now owned by Coty – also expressed her confidence in achieving Coty’s sales guidance for Q3, “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.”

Coty completed the sale of its Wella stake to American private equity KKR in December 2020.

At the time, Coty received a cash injection of $2.5bn, while retaining its 40% stake in the hair care business.

Ten months later, Coty agreed to swap a 9% in the professional group in exchange for half of KKR’s preferred shares in Coty, receiving some 47 million shares in the company’s common stock.

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