S&P cuts Valeant's rating after getting notice from bondholders

Thu Apr 14, 2016 8:39am EDT
 
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April 14 (Reuters) - Standard & Poor's downgraded Valeant Pharmaceuticals International Inc's corporate credit rating on Thursday after the drugmaker got a notice of default from bondholders as a result of a delay in filing its annual report.

The rating agency cut its corporate credit rating on Valeant to 'B' from 'B+' and its secured debt rating to 'BB-' from 'BB'.

The downgrades reflect increased risk of near-term default if the company is unable to file its annual report and unable to negotiate with bondholders over the next two months, S&P said in a statement. (bit.ly/1VqXsdc)

Valeant said on Tuesday that it had until June 11 to file the report, under its bond agreements, but reiterated its intention to file it on or before April 29.

S&P said it was encouraged by Valeant's "unwavering expectation" to file the annual report by April 29. The ratings agency also said it continued to believe that the value of Valeant's assets likely exceeded its outstanding debt.

Valent had long-term debt of about $30 billion as of Sept. 30, according to a regulatory filing.

The company was originally due to file the report by March 15 but said in February that it would not meet that deadline as a result of a committee reviewing its accounting practices.

"In the event that the company alleviates threats of near term default ... we are likely to maintain the rating at 'B' until we have greater confidence that 2016 operating trends will meet our base case," S&P said.

Valeant's U.S.-listed shares were down 0.3 percent at $33 in premarket trading. (Reporting by Ankur Banerjee in Bengaluru; Editing by Shounak Dasgupta)