Valeant offers to increase lender interest payments in exchange for amendment

Tue Aug 9, 2016 9:43pm EDT
 
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NEW YORK, Aug 10 (RLPC) - Valeant Pharmaceuticals International is offering to pay lenders a higher interest rate in order to obtain an amendment to its debt agreement that would loosen one of its covenants, according to sources.

The company previously obtained an amendment earlier this year to help stave off default, allowing it additional time to file its financial statements with securities regulators. Joe Papa, Valeant's chief executive officer, said on a conference call Tuesday that the company would seek to modify the interest financial maintenance coverage covenant on its bank debt.

In addition to loosening its interest coverage ratio covenant, Valeant also wants to change some of the language around asset sales, sources said. There will be a lender call Wednesday at 3 pm to discuss the proposed amendment.

In return for the amendment, the company is offering to increase the interest rate it pays lenders by 50 basis points, according to sources. It is also offering to pay a 25 basis points amendment fee.

Valeant had a $1.35 billion revolving line of credit, a $1.424 billion A-3 tranche A term loan, an $835.6 million A-4 tranche A term loan, a $1.053 billion D-2 tranche B term loan, an $808.9 million C-2 tranche B term loan, a $2.45 billion E-1 tranche B term loan and a $3.88 billion F tranche B term loan as of June 30, according to an earnings release. The company also had $19.26 billion of senior notes.

Lenders must decide if they will agree to the amendment by August 17, the sources said. Barclays is arranging the amendment.

A Barclays spokesperson and a spokesperson for Valeant did not immediately return e-mails seeking comment.

The company, which reported earnings Tuesday, said it repaid $1.29 billion of debt in 2016, according to an earnings presentation. Valeant said it had a net loss of $302 million in the second quarter compared to a net loss of $53 million in the second quarter of 2015, according to the earnings release. (Reporting by Kristen Haunss)