VRX - Valeant Pharmaceuticals International

Valeant Creditors Said to Resist Proposal to Relax Lending Pact

(Bloomberg) -- Valeant Pharmaceuticals International Inc. is facing push back from some of its lenders as it seeks to waive a default and loosen restrictions on its debt, according to people with knowledge of the matter.

The resistance may complicate Valeant’s efforts to win the support it needs before the Wednesday deadline for lenders to respond. The company, which has about $32 billion in total debt, must gain approval from more than half of the investors holding its more than $11 billion of secured loans. Those that are balking are demanding a higher interest rate and a better fee, said the people, who asked not to be identified because the discussions are private. They also want to impose some restrictions on the terms the company is offering on the proposal, they said.

A spokeswoman for Valeant didn’t immediately respond to a request for comment, while a spokesman for Barclays Plc, which is mediating the loan amendment process for the company, declined to comment.

Valeant began seeking an amendment and waiver to its bank credit agreement last week to eliminate a technical default that arose when it didn’t file its 10-K before March 15. The company is offering creditors a 50 basis-point fee and a 0.5 percentage point boost on the interest it pays on its term loans, people with knowledge of the matter said at the time. Negotiations are ongoing and demands could change.

"Some lenders might see it as an opportunity to extract better pricing or other terms," Justin Forlenza, an analyst at independent credit-research firm Covenant Review, said in an interview. "They can meet at a certain point that lenders and the company can get comfortable with."

Under the current proposal, the drug maker is also seeking to loosen restrictions on its credit pact that govern a measure of earnings the company needs to maintain relative to its annual interest expense, Valeant said in a statement on March 30.

Asking lenders to relax loan covenants suggests Valeant may not be able to repay debt as quickly or generate projected earnings, according to Bloomberg Intelligence analyst Elizabeth Krutoholow.

LINK - http://www.msn.com/en-us/money/comp...ist-proposal-to-relax-lending-pact/ar-BBrlCmM

 

Valeant Finishes Accounting and Philidor Review With No More Problems
Drugmaker says it hasn’t identified any additional problems that require further restatements; shares rise

Valeant Pharmaceuticals International Inc. (VRX) on Tuesday said its internal review of how it accounted for revenue through mail-order pharmacy Philidor RX Services LLC is complete and that it didn't find any additional problems requiring restatement.

Valeant’s shares rose 10% to $28.73 on Tuesday.

The Canadian drug company plans to include the restated financials in its 10-K, which the firm reiterated is on schedule to file by April 29, though it has asked lenders for more timeto avoid triggering a potential default.

“After conducting more than 70 interviews and reviewing over 1 million documents, the…committee has not identified any additional items requiring restatements beyond those matters previously disclosed,” Robert Ingram, chairman of the board and chair of the review committee, said Tuesday.

Valeant said it would dissolve the review committee, transferring oversight back to the board and its audit and risk committee.

Last month, Valeant confirmed it would have to restate past earnings because it had recognized a chunk of revenue too soon. It also suggested it had effectively counted some revenue twice.

The main accounting issue dogging Valeant is how it accounted for revenue through Philidor, with which it had close ties. If the ties were as close as they proved to be, revenue shouldn’t have been counted until drugs reached the patient, not when Valeant delivered the drugs to Philidor, the company acknowledged and accountants have said.

Valeant had said in February it should have waited to recognize $58 million in revenue through Philidor, which it said it wrongly booked upon delivery to Philidor rather than dispensation to customers. Much of that amount should have been booked in 2015 rather than 2014, Valeant said.

The company did switch in December 2014 to waiting longer, once it had acquired an option to buy Philidor and started consolidating the pharmacy’s finances as part of its own.

Valeant elaborated last month that some sales before the option were “not executed in the normal course of business,” including sales executed at a time when the company was expecting the option agreement. It should have waited to book the revenue on those sales until the medications were dispensed, it said.

Last month, Valeant moved to replace longtime Chief Executive Michael Pearson, part of a series of steps to regain credibility and show investors it is committed to a fresh start after months of failed attempts.

The company is also seeking the resignation of board member and former Chief Financial Officer Howard Schiller, who signed off on the earnings statements Valeant is now withdrawing. Mr. Schiller has fired back and hired lawyers, denying the “improper conduct” of which the company accused him and declining to step down.

Valeant is pointing much blame at Mr. Schiller, who was Mr. Pearson’s partner in driving Valeant’s rise and who served as interim chief executive in Mr. Pearson’s absence this year. His 3 1/2-year tenure as CFO, which concluded when he left last spring, included the periods for which Valeant is restating earnings.

But even as it pointed the finger at two individuals, Valeant has said its accounting problems were rooted in broader cultural issues.

It said it had concluded that “the tone at the top of the organization and the performance-based environment at the company, where challenging targets were set and achieving those targets was a key performance expectation” may have contributed to improper financial reporting.

Valeant also has handed a board seat to activist investor William Ackman, whose hedge fund has been hurt by its 9% ownership of Valeant shares as they lost almost 90% from their August high.

 

Valeant Shares Have Best Three-Day Run in Almost 20 Years

(Bloomberg) -- For the first time in a long time, this week was a very good one to own stock in Valeant Pharmaceuticals International Inc.

Since Monday’s close, Valeant shares have gained 36 percent, the best three-day run for the shares since 1996, a period that includes the company’s predecessor Biovail Corp. Valeant gained 3.9 percent on Thursday to close at $35.51 in New York trading.

“It seems like it has found a bottom,” said Annabel Samimy, an analyst at Stifel Nicolaus & Co. “You’ve got some clear turning of sentiment. Some of the bigger uncertainties that seemed to spook everyone and create a climate of fear have been resolved.” Samimy has a buy rating on the stock, and a 12-month price target of $65, cut from $200 in March.

Valeant has been through a brutal eight months since the shares peaked at $262.52 on Aug. 5. The company was criticized for charging high prices for its drugs, has been investigated by Congress and the SEC and said it will restate earnings. It also cut guidance and said that Chief Executive Officer Mike Pearson will leave once a successor is found.

In the last week, however, a key board member said the drugmaker could have a new CEO within weeks, the company announced that an internal board probe had found no new major issues, and that it had reached an agreement with lenders over the terms of its debt, lessening fears of a potential default.

“This is a company that’s worth $0 if it’s in default, or it’s worth significantly more than $35 or $36 a share because the underlying assets have value,” said Raghuram Selvaraju, an analyst with Rodman & Renshaw. He has a buy rating on the stock.

The company has a long way to go -- the stock is still worth about $230 a share less than back in August -- but the gains this week suggest that at least for some investors, there could be a bargain available, or that stock has finally bounced off the floor.

“If you’re smart enough to get your arms around where you think the business is, and it looks OK to you, it’s probably a good value,” said Walter Todd, who oversees about $1.1 billion as chief investment officer for Greenwood Capital Associates LLC in South Carolina. “There’s a risk-return tradeoff.” Todd doesn’t own the stock, and said there’s still skepticism about what the company’s actual performance is.

While the company’s shares may have had a good few days, that’s not enough to convince investors who have watched as Valeant went through one of the biggest annihilations of market value in recent history.

Laurie Little, a Valeant spokeswoman, declined to comment.

Risk Remains

The Laval, Quebec-based drugmaker, which is run from New Jersey, has yet to schedule the release of its first-quarter results, and its 2015 report has been delayed because of the earnings restatements. In addition, it remains to be seen if there’s any remaining fallout from Valeant’s now-terminated relationship with the mail-order pharmacy Philidor Rx Services LLC, and how the company’s drugs perform through their new distributor, Walgreens Boots Alliance Inc.

The stock still “just has too many headline risks,” said Robert Pavlik, who helps oversee $9.1 billion as chief market strategist at Boston Private Wealth. “It has to be for somebody who’s probably pretty aggressive in their approach. Who knows what’s going to transpire with the company? I don’t want to be near it right now.”

LINK - http://www.msn.com/en-us/money/comp...three-day-run-in-almost-20-years-1/ar-BBruclD

 

Valeant gets extra month to file annual report

Valeant Pharmaceuticals International Inc (VRX.TO) said on Thursday its lenders had agreed to give it an extra month to file its annual report, providing breathing room for the embattled drugmaker as it tries to win back investor confidence.

The extension provides relief if Valeant is unable to file its annual report by April 29 - a deadline the company reiterated it intended to meet. The company missed an original March 15 deadline, blaming an in-house review of its accounting practices.

Valeant last week said it risked defaulting on its $30 billion debt if it missed the April 29 deadline, raising further questions about the company after a string of controversies, including U.S. government scrutiny of its drug price hikes and former ties to a specialty pharmacy.

Valeant said its lenders had agreed to a May 31 deadline to lodge the report.

"The company is comfortable with its current liquidity position and cash flow generation for the rest of the year, and remains well positioned to meet its obligations," Valeant said, repeating a statement it made last week.

The amendment to the company's credit agreement also allows it to extend the filing deadline for its first-quarter report to July 31 from June 14.

The deal with its lenders requires Valeant to apply substantially all net asset sale proceeds to prepay its term loans. The agreement also waives the cross-default to indentures that arose when the annual report was not filed in March.

Investors in Valeant’s loans agreed to the changes after the company on Tuesday boosted the interest rate on the debt, agreeing to pay an extra one percentage point, according to three sources familiar with the terms who are not authorized to discuss them publicly. The rate is locked in for a year.

The rate will then be subject to the company’s debt compared with earnings before interest, taxes, depreciation and amortization (Ebitda), or leverage.

Valeant was not immediately available for comment on the terms.

Valeant said on Tuesday that the committee, which was probing the company's ties to specialty drug distributor Philidor, had completed its review and had not found anything that would require additional restatements.

Up to Wednesday's U.S. close, Valeant's stock had risen almost 30 percent in two days, helped by that news as well as a comment by key shareholder and board member William Ackman that a new chief executive could be appointed within weeks.

Shares of Valeant were up 4.06 percent at $35.56 in late afternoon trading.

LINK - http://www.reuters.com/article/us-valeant-lenders-idUSKCN0X41GX

 

Valeant's bond holders intend to call default

Valeant Pharmaceuticals International Inc (VRX) said it received a notice of default from its bond holders as a result of its failure to file its annual report on time.

The Wall Street Journal reported earlier on Tuesday that Centerbridge Partners LP intends to call a default.

The move would start a 60-day period during which the embattled drugmaker would have to file its annual report or potentially be forced to repay the bonds early, the WSJ reported. (http://on.wsj.com/1TPIVpH)

 

Interesting times for VRX, but Im not seeing any more panic selling here... so is it safe?

 

Valeant CEO agrees to be deposed in Senate drug price probe
The chief executive of embattled Valeant Pharmaceuticals, J. Michael Pearson, has agreed to be deposed by a Senate committee investigating the causes of soaring prescription medicine prices.

Read full article here: http://www.msn.com/en-us/money/comp...deposed-in-senate-drug-price-probe/ar-BBrHZz0

 

Strong open on VRX today +5% 39M shares traded pre market

 

Valeant Gets Default Notice on Four Bonds Following 10-K Delay
Valeant Pharmaceuticals International Inc., the drugmaker struggling to manage a $32 billion debt load, received notices of default from the trustee overseeing four series of notes after failing to file its 10-K on time.

Read full article here: http://bloom.bg/1NG9EhL

 

Oh man, down it goes again!