Valeant to Borrow $5.315 Billion to Refinance Maturities

(Bloomberg) -- Valeant Pharmaceuticals International Inc. is borrowing $5.315 billion between bonds and loans to refinance upcoming maturities after a strong earnings report earlier this week.

The drugmaker will issue $3.815 billion of loans and $750 million each of secured and unsecured bonds, according to a statement Thursday. The proceeds will be used to refinance the company’s outstanding term loan; its 5.375 percent and 6.375 percent notes due 2020, 6.75 percent notes due 2021, and 7.25 percent notes due 2022.

Valeant is also seeking to amend its existing credit agreement to extend the maturity of its revolving facility to five years from the closing date, as well as modifying some covenants to enhance operating flexibility, the company said in the statement, without disclosing what the covenant changes may be. Some of the bonds that Valeant is trying to refinance have the tightest restrictions in terms of how much additional secured debt the company can issue, Covenant Review said in an April 10 report.

“Given the economic environment right now, you’ve got to feel pretty good that there are windows of times for companies to take advantage and refinance maturities in the 2020-to-2022 window,” said Jim Schaeffer, co-head of public fixed income at Aegon USA Investment Management.

Bridgewater, New Jersey-based Valeant is coming off of a strong quarter in which its key gastrointestinal drug posted impressive sales growth, helping to offset declines in other parts of the business. That allowed the company to boost its full-year forecast, even as it continues to lose billions of dollars and grapple with $25.4 billion in debt. Valeant also said it plans to change its name to Bausch Health Companies Inc., effective in July.

Barclays Plc, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are managing the loan sale, according to a person with knowledge of the matter. Valeant will hold a lender call May 14 at 11 a.m. local time, the person said, asking not to be identified as the details are private.

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