Valeant shares fall as Ackman exit highlights company's challenges

Tue Mar 14, 2017 6:30pm EDT
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By Svea Herbst-Bayliss and Michael Flaherty

BOSTON (Reuters) - Valeant Pharmaceuticals Inc's stock price fell to its lowest level in eight years on Tuesday after the abrupt exit of its biggest supporter put renewed focus on the Canadian company's most pressing problem: raising capital to cut its roughly $30 billion debt pile.

Billionaire investor William Ackman spent more than a year trying to revive Valeant's stock price by helping to overhaul management, refresh the company's board, and push for asset sales. But in a surprise move announced on Monday he said he had sold his entire stake, some 27 million shares, and would be leaving the company's board.

He explained the investment was requiring a "disproportionately" large amount of time and resources. [nL2N1GQ1IN]

This has been his biggest loser since launching his fund in 2004.

On Tuesday, the Canadian company's U.S. listed shares dropped 10 percent to $10.50, their lowest since May 2009, and a fraction of the near $190 a share Ackman's Pershing Square Capital Management paid for them in early 2015. He announced his stake in March 2015 and shares surged to $260 a share a few months later.

Probes into its business practices, accounting and drug pricing caused a collapse in Valeant's shares and the company is now offloading assets to try and pay down debt, amassed during a years-long acquisition spree.

Its new management team refinanced the company’s debt burden last week, giving it more breathing room to repay creditors. Its newly issued notes traded down about 0.8 percentage points on Tuesday.

Last week, Valeant told investors that revenue could fall as much as 8 percent this year but that it had paid down about $1 billion in debt and would put proceeds from the sale of its Dendreon cancer treatment business and three skincare brands for $2.12 billion, announced earlier, to that purpose.   Continued...

FILE PHOTO - William Ackman, chief executive of Pershing Square walks on the floor of the New York Stock Exchange, New York, U.S. on November 10, 2015. REUTERS/Brendan McDermid/File Photo