Heavily shorted Revlon tears up after $1.4 billion loan approval (NYSE:REV)

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Revlon (NYSE: REV) once again made an outsized bullish move, continuing its trend of high volatility after the bankruptcy.

Monday’s outsize move was accompanied by a bankruptcy court ruling that allowed the beleaguered retailer to proceed with a $1.4 billion loan despite objections from creditors. In short, the court ruled that Revlon must be allowed to borrow money to continue operations to which it is entitled under Chapter 11 protections.

The move follows court approval of a $375 million loan in the early stages of insolvency. The new decision unlocks between $200 million and $1.05 billion in additional funds for the cosmetics company, giving the retailer significant leeway to pay off existing debts and maintain operations that have been hit by significant health issues. supply chain, according to the company. The coalition of lenders, known as BrandCo Lenders, would include major private equity firms Ares Ares Management and Oak Hill Advisors.

According to Reuters, legal action could be brought against the loan coalition by junior creditors who have already raised objections to the loans. Creditors called the bankruptcy process a “mess” and argued that private equity lenders had already “scammed” Revlon (REV) during the COVID pandemic, no doubt pushing the company into its predicament. current.

Shares of the insolvent cosmetics retailer have soared 100% higher to its intraday high, touching levels not seen since the stock’s short squeeze in late June. In fact, the stock was halted less than an hour before Monday’s close due to its sudden rise.

As reported in last week’s Catalyst Watch, short-term interest in the name soared to nearly 90% on Friday. As such, another upward squeeze could be underway on Monday as trading volume trended 3x the daily average.