It was, we may say, only a matter of time (and, of course, money) before we'd start to see them: the circling buzzards pointing the way to the inevitable and easily foreseeable end that has all along awaited the latest effort of Ronald ("The Finagle King") Perelman to transform himself from a Wall Street hustler into something respectable in midtown.

We speak in this case of the rumors that have lately been circulating that the irrepressible Finagle King is preparing to sell his prize possession, makeup company

Revlon

(REV) - Get Report

, for what could turn out to be a huge and humiliating loss for Perelman's investors (though not, we may assume, for Finagle himself).

Some may still recall -- though Finagle would assuredly wish it otherwise -- that scarcely had the junk-bond era of the 1980s begun to fade than Perelman popped up in

The Wall Street Journal

to proclaim himself a changed man. No longer a corporate raider and alleged greenmailer, he was now to be understood as Ron Perelman, chief executive and "builder" or "industrialist" -- the best evidence of which was taken to be his steady helmsmanship of Revlon, which he'd bought with $1.5 billion in

Michael Milken's

junk bonds back in 1985.

Helmsmanship? Builder? Industrialist? Changed man? Not! In the nine years after his media debut as a born-again industrialist, Perelman showed himself to be living proof of the Chinese proverb that the habit of a year is the habit of a lifetime. Whereas he predictably enough proved to be pretty much a washout as a builder and/or industrialist, he simultaneously showed himself to be an asset-stripping, corporate-looting Wall Street finagler without peer.

From 1990 to the end of 1998 -- which is to say, for virtually the whole of the booming 1990s -- the Finagler's steady hand at the wheel navigated Revlon to a molasses-paced 5% average annual growth rate in sales, while the company relentlessly piled up $1.05 billion in cumulative net losses along the way. Meanwhile, he shuffled so much debt back and forth between Revlon and various other operations of his that it soon became impossible to figure out which of his companies were on the hook for how much to whom -- save that by summer 1998 the debt load stood at more than $1.3 billion on Revlon's balance sheet alone.

Having thus enveloped Revlon in a financial fog, Perelman tried to fob the business off on the public not once but twice, succeeding finally in March 1996, when he sold 8.6 million shares, or 17% of the company, in a $24-per-share initial public offering underwritten by

Merrill Lynch

. The offering, which raised close to $188 million for the company, put a market value of roughly $1.2 billion on the company. And since the Finagler owned virtually all the stock that wasn't offered in the IPO, he himself wound up -- on paper at least -- roughly $996 million richer.

But given enough time and sunlight, even the dankest fog will eventually lift. And that is what happened as 1998 progressed and evidence began to pile up that Revlon's sales were in a skid. Retail sales almost always decline following the end of the Christmas season, the busiest time of the year for retailers. But during the January-to-March 1998 period, they fell a steep 29% from the previous quarter, whereas they had fallen only 20% during the January-to-March period of the year before.

Worse was to come. During the April-to-June 1998 period, the situation appeared to stabilize somewhat. But then came the July-to-September quarter and sales slipped again, this time not only against the previous quarter but even when measured against the comparable year-earlier period. Against that benchmark they fell 5.6% to $548 million. And then came 1998's all-important fourth quarter and the slide got even worse, dropping 10.2% from the comparable year-earlier quarter to a mere $630 million.

Here's how Perelman explained all of this in a recent Revlon financial filing with the

Securities and Exchange Commission

:

Net sales for 1998 were impacted by reduced purchases by some retailers, particularly chain drugstores, resulting from improved inventory management through systems upgrades and inventory reductions following several recent business combinations. The company expects retail inventory balancing and reductions to continue to affect sales in 1999.

Here's a different way he might have said the same thing if he'd wanted to try English instead of bafflegab: Our stuff ain't selling so hot -- and the outlook's lousy.

That, at least, was how Wall Street sized up the situation, and it promptly sent Revlon's stock into a sickening swan dive that knocked 75% off its value from July to October 1998. Finally, the slide stopped at about 13, where it stayed until only a few days ago.

Then, on March 23, rumors started to spread that

Unilever

(UN) - Get Report

, the Anglo-Dutch soap people, had approached Perelman with a buyout offer and, it was said, His Finagleness actually invited them in to sit down and kick it around. Revlon itself has declined all requests for comment on the matter. "We don't comment on press speculation," said one of the Finagler's food tasters.

In Wall Street's current manic mood, the effect on Revlon's stock was like when they put those electricity things on bodies on

ER

and then

Anthony Edwards

yells "Clear!" and they zap the corpse and it sits up and looks around. That's precisely what shares in Revlon did, fibrillating from 13 to 24 in three palpitating days on the expectation that something might actually be in the works.

There are, of course, several ways to view the miracle. With roughly 51 million shares outstanding, an $11-per-share price spurt on a buyout rumor might be viewed as Wall Street's collective judgment regarding how much more Revlon would be worth if Perelman could simply be made to go away: $561 million.

A second, and probably more likely, explanation is that deal arbs, who lurk in Wall Street's tall grass waiting for just such situations, simply pounced on the rumor and bid up the stock on a bet that there was probably some truth to the story and that an 85% premium was the maximum anyone would pay to acquire any company these days.

Whatever thinking triggered the spurt, the very fact that it occurred now may be maneuvering Finagle into a corner. That's because, psychologically at least, the arbs seem temporarily to have put a cap on what Wall Street is likely to think Revlon is worth even in a buyout: no more than the $24 per share for which Perelman sold the shares to the public three years ago in that March 1996 IPO.

One clever acquaintance of mine who runs a hedge fund in New York told me March 25 that he now sees little risk in shorting Revlon. "It's like this," he explained. "The company's fundamentals are awful, and there's no turnaround in sight. So it's hard to see the shares going any higher than they already are. The arbs have simply sucked the premium out of the deal before anything was even announced. So if you short it at 24, you can take your money and be happy, and the worst you can lose is maybe a buck at the most if the deal takes place at all. But if no deal gets announced, this puppy will soon be selling for 13 all over again and you'll have made a bundle." That very day the stock started to weaken, closing at about 21 1/2. At press time it was selling for 19 1/4.

As for what Revlon is really worth, well, here's what Wall Street thinks: A year ago, analysts were pricing the company at 50 -- or about 8.5 times forecast year-ahead earnings of $5.90 per share for 1999. Now they're saying the company will earn only $1.48. Eight and a half times that and you're looking at a $12 stock, which was where the shares were trading until the buyout rumor got going.

And that's the best case you can make. Revlon is, after all, a company with stagnating revenue of $2.2 billion and a shrinking operating margin that has fallen by nearly half in the past two years and now stands at a mere 5.5%. (In other words, the company's operating income is down an astonishing $90 million in the year just ended.) And its operating cash flow is erratic -- negative to the tune of $51.5 million in 1998 following a positive flow of $8.7 million in 1997 and negative $10.3 million in 1996.

On a balance-sheet basis, it is hard to find any value in the company at all. The whole operation is being run with only $34.7 million of cash in the drawer. Nearly all the rest of Revlon's $904.7 million in current assets are tied up either in uncollected bills from customers or in inventories of unsold hairspray, shampoo and whatnot. The company has done an OK job of holding down inventories of raw materials, but the inventories of finished goods keep piling up.

The worst news of all is on the liability side of the ledger: more than $1.6 billion in long-term debt, the interest on which (close to $138 million yearly) wiped out operating income for the company last year and pitched it $143 million into the red. Unless Finagle agrees to absorb a whole lot of this debt in a buyout -- which is not bloody likely, unless he can find someone else he can turn around and stick it with -- it is hard to see how a buyer would be able to sell off even the company's brand names following a buyout. The debt would keep getting in the way.

This debt was forced down Revlon's throat by Finagle for the sole purpose of enabling him to buy the company's stock and set himself up to run the place -- and as we've seen, the cumulative losses that have thus resulted have now totally wiped out all shareholder equity in the business and, on a balance-sheet basis, rendered the company insolvent with a negative net worth of $648 million.

Meanwhile, a look at some of the Finagler's affiliated operations indicates that he's pledged his shares in Revlon for yet more loans -- just as he did to raise money on shares of his bankrupted

Marvel Entertainment Group

business. This suggests plainly enough that if Revlon were to fail, it would likely take down other parts of the realm too.

Maybe Unilever -- or somebody -- will be willing to step up and make an offer for the company in spite of its acne-laden financials. Yet even at 24 -- which is less than half its value of last July -- it is hard to see how anyone, with the sole exception of Perelman himself, will avoid getting hosed. Finagle will skate free because, as best as can be determined, he has virtually none of his own money in Revlon to begin with.

Only those who have trusted him wind up getting taken to the woodshed in Finagle's deals -- those who bought into the Ron Perelman Midas Touch malarkey not just with Revlon but an astounding list of equally lurid finagles and hustles. There's

Coleman

(CLN)

, the camping gear crowd, which Perelman bought with borrowed money back in the late 1980s, then palmed off in a 1992 IPO at $12. Today it sells for barely $8.

There's

Meridian Sports

(MSPO: OTC BB), which the King of All Ripoffs took over, took private, skinned alive, then sold back to the public in a 1994 IPO at $11 per share. Today those shares sell for about 40 cents on the over-the-counter bulletin board.

And there's also Marvel Entertainment (16 1/2 to effectively zero, before being bought by

Toy Biz

).

Add it all up and, on a back-of-the-envelope basis, you're looking at one big multibillion-dollar heap of misery. Now it looks like Revlon may soon be added to the pile. Ron Perelman: a true Eye to the Keyhole all-star.

Christopher Byron's column appears in the New York Observer, and he also writes a Wall Street and investing column for Playboy. He is the former assistant managing editor for Forbes, the Wall Street correspondent for Time and the Bottom Line columnist for New York. Byron holds no positions in any of the stocks discussed in his column. While he cannot provide investment advice or recommendations, he welcomes your feedback at

commentarymail@thestreet.com.