SUBSEQUENT EVENTS

9 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

Convertible Preferred Equity Financing

On May 11, 2020, the Company entered into an investment agreement with KKR, relating to the issuance and sale to KKR of 750,000 shares of the Company’s Series B Convertible Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”), for an aggregate purchase price of $750.0, or $1,000 per share. The Series B Preferred Stock will have a liquidation preference of $1,000 per share. Each Series B Preferred Stock share will be convertible into 160.2564 Class A Common shares, subject to adjustment if the definitive agreement with respect to the Sale of PB transaction is not executed by May 30, 2020. The Series B Preferred Stock is convertible at the option of the Holders at any time and at the Company’s option after the third anniversary of issuance if a share price threshold is met for a period as defined in the agreement. Holders of the Series B Preferred Stock will be entitled to a dividend at the rate of 9.0% per annum, accruing daily and payable quarterly in arrears, and subject to an upward adjustment to 12% per annum if the definitive agreement with respect to the Sale of PB transaction is not executed by May 30, 2020; provided that if the definitive agreement with respect to the Sale of PB transaction is executed by May 30, 2020, then the dividend rate shall increase by 1.0% on the seven (7) year anniversary of the closing of the initial issuance (the “Closing Date”) and increasing by an additional 1.0% on each subsequent anniversary up to a total limit of 12.0%. If the Company does not declare and pay a dividend on the Series B Preferred Stock, the dividend rate will increase by 1.0%, until all accrued but unpaid dividends have been paid in full. Dividends will be payable in cash, in kind through the accrual of additional dividends with respect to a share of Series B Preferred Stock, or any combination thereof, at the sole discretion of the Company. The closing of the issuance and sale of the Series B Preferred Stock is conditioned upon certain customary closing conditions. Pursuant to the Investment Agreement, KKR will make an incremental purchase of $250.0 Series B Preferred Stock upon the signing of the PB Sale transaction (see below), conditioned upon certain customary closing conditions.

Strategic Review Update

On May 11, 2020, the Company also announced that as a result of its previously announced strategic review that it signed a MOU with KKR for the sale of a 60% interest in its Professional Beauty business and associated hair brands, including OPI and GHD (“the PB Sale”), at an enterprise value of $4,300.0. Under the terms of the MOU, the Company agreed to exclusively negotiate a definitive agreement with respect to the PB Sale with KKR. Upon reaching such agreement, Coty will carve out such business into a standalone company in which KKR will acquire a 60% stake and Coty will retain the remaining 40% interest. On signing of the PB Sale transaction, KKR will make an incremental convertible preferred investment of $250.0 in Coty.

Dividend Update

The Board of Directors has suspended the payment of dividends, in keeping with the Company's 2018 Coty Credit Agreement, as amended.

Expansion of Turnaround Plan

As described in Note 7—Restructuring Costs, the Company announced an expansion of the Turnaround Plan on May 11, 2020. As part of this expansion, the Company plans to implement a 25% reduction of our cost base, which does not vary with revenues, by the end of fiscal 2023. The Company expects to incur cash costs consistent with the previously announced estimate. This includes restructuring costs, primarily related to employee termination benefits, an adaptation of our supply network and organization as well as a reduction of certain discretionary expenses.

Debt Amendment

See Note 10—Debt for details of the amendment to the 2018 Coty Credit Agreement made on April 29, 2020.