Valeant says Goldman Sachs sold 1.3 million shares backing loan to CEO
NEW YORK (Reuters) - Valeant Pharmaceuticals International (VRX.TO: Quote) (VRX.N: Quote) said on Friday that Goldman Sachs sold 1.3 million shares of Valeant on Nov. 5 that were securing loans made to its CEO Michael Pearson.
Valeant shares on Thursday closed at $78.77 in New York trading after having fallen as much as 20 percent during the session, a decline analysts attributed to concerns over business practices at the Canadian drug maker and pressure on Pearson.
Valeant, which has been under pressure over scrutiny of its high price markups and accusations it used Philidor Rx Services pharmacy to inflate revenue, put out a statement on Thursday backing its CEO.
The company was responding after one of its biggest shareholders, Bill Ackman, told the Wall Street Journal he had suggested to a Valeant board member that Pearson might have to go. On Thursday, Ackman emailed the company saying he still supported Pearson.
Valeant's shares rose 4 percent in premarket trading on Friday following the disclosure that Goldman Sachs had sold shares on Thursday. Goldman Sachs declined to comment.
Valeant said in a press release that Pearson pledged about 2 million shares as collateral for loans of about $100 million. Goldman Sachs required repayment of the loans and sold the shares in order to be able to repay them in full, the company said.
"It was not my desire that shares be sold now," Pearson said in the statement. "I have the complete confidence in Valeant's ability to move forward."
The loans were used for financing charitable contributions, purchasing Valeant shares, and meeting tax obligations related to vesting and payment of Valeant equity awards, among other things, the company said.
The charitable contributions included donations to Duke University and to help fund a community swimming pool, the release said.
(Reporting by Caroline Humer; Additional reporting by Richa Naidu in Bengaluru; Editing by Chizu Nomiyama and Frances Kerry)
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