Valeant Shares, Bonds Slump After It Says It Will Seek To Amend More Of Its Debt Covenants

Valeant Pharmaceuticals International Inc. shares slid 6% Tuesday, after the company said it is seeking to refinance and amend more of its debt, including removing covenants from Term B loans. The company said it will use the proceeds of the sale of its skincare assets to L'Oreal to pay down about $1.1 billion of senior secured term loans. The troubled drug company will seek to refinance and amend its existing credit agreement, issue new Term B loans that extend the maturity of current Term B loans due before 2022, issue new secured debt, and repay its remaining Term A loan due in April 2020. Valeant further plans to repay a portion of its 6.75% secured debt due in 2018, as well as relax maintenance covenants in the revolver and remove the covenants from Term B loans. "While the refinancing is not surprising, it reflects the cloudy outlook on future earnings, in our view," said Mizuho analyst Irina Koffler. "Management previously indicated that it would consider refinancing and was more focused on its EBITDA than its EPS." Valeant's most active bonds, the 6.125% notes that mature in 2025, were last quoted at 79 cents on the dollar, according to MarketAxess. The stock has fallen 82% in the last 12 months, while the S&P 500 has gained 18%.