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Physicians Formula Holdings Completes Refinancing

Physicians Formula Holdings has completed the refinancing of subordinated debt with a new term note and additional proceeds from the existing line of credit. Investment bank FocalPoint Securities completed the growth capital financing for the business.

PRESS RELEASE

FocalPoint Securities, LLC (“FocalPoint”) has completed another successful financing to support the growth capital needs of our client. Physicians Formula Holdings, Inc. (NasdaqGS: FACE), (“Physicians Formula” or the “Company”) completed the refinancing of subordinated debt on November 10, 2011 with a new term note and additional proceeds from the existing line of credit. The transaction demonstrates FocalPoint’s capabilities in securing capital with attractive terms under the most challenging of financing market conditions.

The Company is an innovative cosmetics company that addresses skin imperfections through a problem-solving approach. In this difficult retail environment, the refinancing provides Physicians Formula with a number of benefits which include, lower interest expense, extended debt maturities, and increased profitability as it manages its operations and growth initiatives. FocalPoint served as exclusive financial advisor to Physicians Formula, its third transaction with the Company after advising it on the refinancing of its credit facility and growth capital raised in November 2009.

Ingrid Jackel, Chairwoman and CEO of Physicians Formula, said, “The completion of our refinancing is an important step in the improvement of Physicians Formula’s cost of capital and financial flexibility, and will help ensure that we have the financial resources necessary to execute our growth strategies. The significant savings that will be generated, coupled with the success we have seen in our 2011 investment strategy, has set the foundation for both growth and profitability in 2012.” Jeff Berry, CFO of Physicians Formula, added, “Without FocalPoint by our side, we would not have been able to negotiate such attractive terms on the credit facility and new term note.”

Rajesh Sood, Managing Director at FocalPoint, commented, “We are pleased with the outcome of this transaction and the results that FocalPoint was able to achieve for Physicians Formula. In spite of the challenges in the current capital markets, borrowers have a unique opportunity to refinance at historically low rates. FocalPoint is continually evaluating the financing markets on behalf of its current and former clients. When we realized an opportunity existed for Physician Formula to refinance its capital structure and save nearly $1.5 million in interest expense in the first twelve months following the refinancing, we worked with the Company to find a comprehensive solution that reduced the cost of capital while improving overall capital availability.”

About Physicians Formula Holdings, Inc.
Physicians Formula is an innovative cosmetics and skin care company operating in the mass market prestige, or “masstige”, market. Under its Physicians Formula brand name, created in 1937, the Company develops, markets and distributes innovative, premium-priced products for the mass market channel. Physicians Formula differentiates itself by addressing skin imperfections through a problem-solving approach, rather than focusing on changing fashion trends. Currently, Physicians Formula products are sold in 25,700 stores including those operated by Wal-Mart, Target, CVS and Rite Aid.

About FocalPoint Securities, LLC
FocalPoint is an independent investment bank, specializing in mergers and acquisitions, private placements (both debt and equity), financial restructurings and distressed transactions. The firm’s primary focus is on middle-market companies. Please contact Rajesh Sood at (310) 405-7000 with any questions about this transaction.