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Your Gulfstream 650 is on the market. So is her 257 foot yacht. Movers removed boxes of art from his Upper East Side home after he struck a deal with Sotheby’s to sell hundreds of millions of dollars worth of works.
He has dumped his stake in Humvee maker AM General, sold a flavoring company he had owned for decades, and hired banks to find buyers for the shares he has in other companies.
What the hell is going on with Ron Perelman?
His exploits on and off Wall Street have been in the tabloids in New York since the 1980s. But now, at an age when most billionaires are loosening up, the 77-year-old Perelman is faced with a host of financial challenges, especially at Revlon, its cosmetics giant.
Once touted as America’s richest man, his wealth has fallen from $ 19 billion to $ 4.2 billion in the past two years, according to the Bloomberg Billionaires Index.
Bankers, members of high society, and art collectors have been talking about Perelman since his investment company, MacAndrews & Forbes, said in July that it would rework its properties in response to the coronavirus pandemic and the havoc it caused to American businesses. , including yours.
“We quickly took meaningful steps to react to the unprecedented economic environment we were facing,” Perelman said in a statement.
“I have been very public about my intention to reduce leverage, optimize operations, sell some assets and convert those assets into cash to seek new investment opportunities and that is exactly what we are doing.”
Perelman also gave more prosaic reasons for the change, including spending time with his family during the confinement and a desire for a simpler life.
“I realized that for too long I had held on to too many things that I don’t use or even want,” he said. “I came to the conclusion that it is time to clean the house, simplify and give others the opportunity to enjoy some of the beautiful things that I have acquired just as I have for decades.”
Graydon Carter, the former Vanity Fair editor who has known Perelman for three decades, said the change in Perelman’s attitude is sincere.
“Often when people say this kind of thing, they mask something else. In Ronald’s case, it’s true,” said Carter, who partnered with Perelman to reopen the Monkey Bar in Midtown Manhattan.
“He has learned to love and appreciate the bourgeois comforts of family and home.”
Carter described Perelman as a “charismatic swordsman” who once overjoyed his nights in New York’s social circle. But he said Perelman is now “crazy to spend time at home” with his fifth wife Anna, a psychiatrist, and their two young children.
Richard Hack, who wrote an unauthorized biography of Perelman in 1996, is skeptical.
“If you want a simpler life, buy a farm in Oklahoma, don’t sell a painting of your house in Manhattan,” Hack said. “If you are selling your art, it is because you need cash.”
Art includes 0 to 9 by Jasper Johns, priced at $ 70 million, Gerhard Richter’s Zwei Kerzen (two candles), which sold for more than $ 50 million, and Leaving Paphos Ringed with Waves (I) by Cy Twombly, who found a buyer for about $ 20 million, according to people with knowledge of the matter, who asked not to be identified as the sales were private.
“What he’s selling is the best,” said Wendy Goldsmith, an art consultant in London.
Some proceeds are scheduled to pay off Citigroup loans, according to people with knowledge of the deals. She also has loans from JPMorgan Chase & Co, Bank of America and UBS Group related to her artwork, filings show.
These are not forced sales, a Perelman spokesman said. He also denied a New York Post story that The Creeks, his 57-acre estate in East Hampton, is quietly marketed and said he remains committed to his considerable philanthropy.
Perelman is building a performing arts center in the financial district, is vice president of the Apollo Theater and serves on the boards of Columbia Business School and New York-Presbyterian Hospital.
It’s a surprising turnaround for Perelman, long celebrated and feared for crafting some of the most ambitious deals of the 1980s and 1990s, and for the litigation, divorce, and corporate fights he left in his wake.
“He was imaginative, aggressive and innovative in ways that changed the financial landscape,” said investment banker Ken Moelis, a longtime Perelman adviser.
But now, one of the original pioneers of the Michael Milken-driven junk-bond acquisition era is realizing that there is too much debt, especially during a pandemic.
Take Revlon, which is at the center of your empire.
His market value of $ 365 million is a whisper of the $ 1.74 billion he paid for the company in 1985. He owns about 87 percent of Revlon and is in full control of the company, run by his daughter. , Debra Perelman.
For decades, it strained under a heavy debt load, forcing Perelman to make loans or pump funds while switching executives to pursue various changes. The billionaire made it clear in a Wall Street Journal interview that he “loved the business” and, for better or worse, he defined it more.
Revlon, which was slow to respond to changing trends 20 years ago, recently lost sales to smaller beauty companies that attracted customers with social media. Now revenues are falling further due to store closures.
The company is $ 3 billion in debt, some of its bonds are trading at 14 cents on the dollar, and the company faces a cash crisis in November. A Revlon spokesperson declined to comment.
Her problems are not limited to lipstick. Perelman used his Revlon shares as collateral for the MacAndrews & Forbes debt, documents show. Shares have slumped 68 percent this year, a drop that would normally require lenders to seek additional collateral or loan repayments.
Equities in other companies in his portfolio, including Scientific Game and Vericast, were also pledged against the debt of MacAndrews & Forbes. At least nine banks have claims against Perelman’s assets, including his art collection, his home in the Hamptons and several airplanes. Approximately $ 267 million in mortgages are tied to the company’s Upper East Side headquarters in Manhattan and other buildings it owns.
Perelman has advanced plans to sell some of his stakes.
MacAndrews & Forbes reached an agreement this week to sell their 35 percent stake in Scientific Games to an Australian investment firm.
In July, KPS Capital Partners agreed to buy Perelman’s stake in AM General, the Indiana-based maker of Humvees and other vehicles, for an undisclosed amount.
A $ 439 million deal was completed in June to sell Flavors Holdings, a manufacturer of sweeteners and food products, to Whole Earth Brands Inc.
However, simplifying Mr. Perelman’s properties further might be easier said than done.
Revlon’s $ 3 billion in debt would be a concern to any potential buyer. And Vericast, a collection of marketing and payments businesses, has struggled to navigate industry changes while dealing with its own substantial debt load. Two of its main sources of income are check printing and print advertising, both in decline due to digital payments and online marketing. Your RXSaver and RetailMeNot units are being bought, indicating that it may be easier to sell the business in parts than in its entirety.
Even art sales can be problematic. A Francis Bacon painting belonging to Perelman, valued between $ 15 million and $ 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 taking its toll at MacAndrews & Forbes, where several of Perelman’s most senior staff have emerged in quick succession.
In July, General Counsel Steve Cohen departed, followed by spokesman Josh Vlasto and James Chin, who led the capital markets group. Chief Financial Officer Paul Savas resigned in June due to irregularities with $ 5 million in insurance payments between Revlon and MacAndrews & Forbes. He was replaced by Jeffrey Brodsky, who according to his LinkedIn profile has “extensive experience in crisis and change management.”
Still, those who know him well say any recent setback won’t define him.
“Ronald has been negotiating at the highest level for forty years,” Moelis said. “Even Michael Jordan missed a shot.”
BLOOMBERG
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