For billionaire Ronald O. Perelman, the time to cash in his chips is now. And, of course, by "cash in his chips", we mean liquidate everything in a panic after Covid sends your highly leveraged empire into ruins.
In what will likely wind up as a microcosm of the United States economy as a whole, Perelman is currently in the process of selling his Gulfstream 650, his 257 foot yacht and "crates" of his artwork, according to Bloomberg. According to the report, he has already sold his stake in AM General, sold a flavorings company he has owned for decades and has hired banks to sell stock he owns in other companies.
Among the art he is selling is Jasper Johns’s “0 Through 9,” worth about $70 million, Gerhard Richter’s “Zwei Kerzen (Two Candles),” worth about $50 million and Cy Twombly’s “Leaving Paphos Ringed with Waves,” which is worth about $20 million.
Art adviser Wendy Goldsmith said: “What he’s selling is as blue chip as it gets."
Perelman, under pressure due to his crashing stake in Revlon, has seen his fortune drop from $19 billion to just $4.2 billion over the last two years, according to the Bloomberg Billionaire's Index. His investment company, MacAndrews & Forbes, said it needed to "rework its holdings" back in July due to the pandemic.
That "reworking" looks more like a fire sale of - well - everything.
Perelman said publicly: “We quickly took significant steps to react to the unprecedented economic environment that we were facing. I have been very public about my intention to reduce leverage, streamline operations, sell some assets and convert those assets to cash in order to seek new investment opportunities and that is exactly what we are doing.”
He continued: “I realized that for far too long, I have been holding onto too many things that I don’t use or even want. I concluded that it’s time for me to clean house, simplify and give others the chance to enjoy some of the beautiful things that I’ve acquired just as I have for decades.”
A friend of Perelman's, Graydon Carter, told Bloomberg: “Often when people say this sort of thing, it’s masking something else. In Ronald’s case, it’s true. He has learned to love and appreciate the bourgeois comforts of family and home.” He described Perelman as "crazy about spending time at home".
Some of his sales will go to pay down loans from Citigroup, though Perelman's spokesman says they are not "forced sales". She also denied Perelman is selling his 57 acre estate in the Hamptons.
Perelman is best known being a fearless financial engineer in the 1980's and 1990's. Ken Moelis said of Perelman's track record: “He was imaginative, aggressive and innovative in ways that changed the financial landscape.”
But the $1.74 billion valuation Revlon had back in the 1980's when he purchased it has now fallen to just $365 million. Perelman loved the business and said it "defined him". He had offered it several loans and had catalyzed several executive changes to try and keep the business afloat. Revlon is now losing to smaller cosmetic shops that advertise through social media - while dealing with the effects of Covid.
Some Revlon bonds trade at 14 cents on the dollar and the company has $3 billion in debt.
He used some of his massive stake in Revlon as collateral for debt in MacAndrews & Forbes. Revlon shares are down 68% this year, likely triggering the deluge of selling Perelman is doing.
All told, "at least nine banks" have claims against his assets, including his art collection, house in the Hamptons and "various aircraft". There are $267 million in mortgages linked to his Upper East Side headquarters for MacAndrews & Forbes.
Currently, Perelman's art collection makes up about a third of his fortune. And that can be tricky, for assets that have an illiquid market. Recently, one painting he tried to sell was pulled from auction at the last minute due to lack of interest.
MacAndrews & Forbes saw its general counsel, spokesman, head of capital markets and CFO all depart over the last few months.
And despite the spin on Perelman's fire sales as being a way to spend more time with family, Perelman has his skeptics, including Richard Hack, who wrote a book about him in 1996.
Hack concluded: “If you want a simpler life, you go buy a farm in Oklahoma, not sell a painting out of your townhouse in Manhattan. If he’s selling his art, it’s because he needs cash.”