* Greater clarity for investors "sorely needed" -analyst
* Unclear how Valeant will look in 18 months -former
investor
* New CEO Papa tackling issues head-on -PR expert
By Allison Lampert
LAVAL, Quebec, June 14 (Reuters) - The new chief executive
of Valeant Pharmaceuticals International Inc (NYSE:VRX) VRX.TO , Joe Papa,
will appear before investors at the company's annual meeting for
the first time on Tuesday, likely facing hard questions after
months of bad news torpedoed its stock.
Valeant's meeting in Laval, Quebec, comes as its share price
trades 90 percent lower than in August 2015, weighed down by
concerns over its acquisition binge of recent years, use of a
specialty pharmacy and backlash over massive price increases for
some drugs.
Greater clarity on the company's direction is "sorely
needed" for investors, along with evidence that it can generate
substantial free cash flow, said Raghuram Selvaraju, analyst at
Rodman & Renshaw, a unit of investment bank H.C. Wainwright.
"They cut guidance to a point where now if there are any
additional disappointments, any further negative surprises, any
further reductions in guidance, there's going to be a crisis of
confidence in the company regarding whether or not they can
continue to meet their debt covenants," he said.
Valeant declined to comment.
For Papa, a seasoned pharmaceutical industry executive who
took the reins in May there was no honeymoon. The
company last week cut its 2016 forecast and said it would
consider selling assets to pay down its $31 billion debt.
Shares fell nearly 15 percent that day.
"I don't think Valeant is in a place right now to know
exactly what the company looks like 18 months from here," said
Patrick Kaser, portfolio manager at Brandywine Global. "The
uncertainty certainly rose meaningfully (last) week. There's
more doubt."
Valeant's diminished outlook helped convince Brandywine to
sell its position in the company last week.
Kaser said he and some other investors met Papa after
Valeant's quarterly call. Some, he said, wanted to know what the
future holds for Valeant's faltering distribution agreement with
pharmacy chain Walgreens Boots Alliance Inc WBA.O . Others want
to know what assets it will sell, he said.
PAPA'S 'PLAYBOOK'
Papa's "playbook" for soothing investors should be simple -
outline a turnaround plan and address concerns directly, said
Patrick Hillmann, a senior vice-president at public relations
firm Levick.
"A lot of times, CEOs will try to run from their problems,
and I think he has for the most part turned it around and taken
some of these issues head-on," said Hillmann, whose firm is not
working with Valeant.
Billionaire investor Bill Ackman, whose Pershing Square (NYSE:SQ)
Capital Management is Valeant's biggest shareholder, also will
attend the meeting. A spokesman for the New York-based hedge
fund declined to comment.
In a letter to investors, Ackman called Papa "an ideal
choice for Valeant," citing his reputation for integrity and his
performance as CEO of Perrigo Company PLC PRGO.N .
Privately, Ackman has talked about the effects of Valeant's
stock price drop on his own portfolio as has told some clients
he expects redemptions to be higher for the second quarter than
in past quarters when investors pulled out less money than
usual, one investor said.
(Additional reporting and writing by Rod Nickel in Winnipeg and
Svea Herbst-Bayliss in Boston; Editing by Matthew Lewis)