Oriflame Holding AG, a cosmetics seller known for its beauty and personal care products, is facing further distress as its financial performance continues to decline. The company recently reported a significant drop in revenue and profit, causing its debt to slide deeper into distressed territory. Bondholders, concerned about the situation, have sought the assistance of investment bank Moelis & Co. to evaluate their options.
The repercussions of Oriflame’s financial struggles are evident in the market, with its $550 million notes due in 2026 losing nearly 3 cents on the dollar, trading at just 26 cents by 3 PM London time. The company’s adjusted EBITDA for the fourth quarter stood at €6.2 million ($6.7 million), representing a staggering 84 percent decline compared to the previous year.
Several factors have contributed to Oriflame’s weakened performance. The company has been grappling with rising inflation and the repercussions of the ongoing war in Ukraine, primarily due to its exposure to the Russian market. Additionally, Oriflame had to undergo a significant organizational restructuring, resulting in a reduction of 20 percent of its workforce.
As a result, Oriflame’s notes have experienced a substantial decline in value, now trading at approximately a quarter of their face value. Special situation funds have taken advantage of the situation, acquiring these securities as their prices dropped. Notably, Blantyre Capital Ltd. and other funds have engaged with investment bank Moelis to explore potential options, according to anonymous sources familiar with the matter.
When addressing investors in a recent presentation, Oriflame’s management stated that the company’s focus for 2024 would remain on operational transformation and repositioning the business. Only after addressing these crucial aspects would they turn their attention to the impending bond maturities. As of December 2023, Oriflame held €80.6 million in cash on its balance sheet, providing some liquidity amidst these challenging times.
Despite the distressing financial situation, Oriflame has not responded to requests for comment.
