LPC: Valeant chips away at US$31bn debt burden with US$47.5m repayment

By Kristen Haunss
NEW YORK, June 10 (Reuters) - Valeant Pharmaceuticals (NYSE:VRX)
International on Tuesday repaid about US$47.5m of its term debt
in a mandatory asset sale payment, according to sources.
In order to allow Valeant to stave off default, lenders, as
part of a credit agreement amendment negotiation earlier this
year, pushed to require the specialty drug company to use net
asset sale proceeds to prepay the term loan portion of the
company's US$31bn of debt.
The company, which on Tuesday also announced a first quarter
net loss of US$373.7m, told lenders June 1 that it would make a
payment to its Tranche B term loan holders on June 7 totaling
US$47,497,159.53, according to sources. The prepayment was made
on a pro-rata basis.
While the repayment does not make much of a dent in the
company's US$31bn of debt, it is a step in the right direction,
investors said.
As of March 31, the company had a US$1.45bn revolving line
of credit; a US$1.78bn A-3 term loan A; a US$939.4m A-4 term
loan A; a US$1.089bn D-2 term loan B; a US$836.4m C-2 term loan
B; a US$2.532bn E-1 term loan B and a US$4.047bn F term loan B,
according to a June 7 regulatory filing. The company also has
senior notes.
Management, in a call with analysts June 7, said the company
aims to sell non-core assets and repay US$1.7bn of debt in 2016.
"We remain focused on reducing our permanent debt, which
includes our term loans and bonds," Linda LaGorga, Valeant
treasurer, said on the call.
In April, Reuters reported Valeant brought in investment
banks to review its options amid interest from buyout firms and
other companies for a number of its businesses.
Citing continued challenges throughout 2016, the company
slashed its revenue forecast for the year to a range of US$9.9bn
to US$10.1bn from an earlier outlook range of US$11bn to
US$11.2bn, according to a June 7 earnings news release. It also
cut its adjusted earnings per share guidance to US$6.60 to
US$7.00 from earlier guidance of US$8.50 to US$9.50.
"The first quarter's results reflect, in part, the impact of
significant disruption this organization has faced over the past
nine months," Chief Executive Joseph Papa, who took over from
former head Michael Pearson (LON:PSON), said in the news release.
A spokesperson for Barclays (LON:BARC), the agent on the loan, declined
to comment. A spokesperson for Valeant referred questions about
the debt repayment to previous comments the company has made.