NEW YORK, June 10 (Reuters) - Valeant Pharmaceuticals International on Tuesday repaid about US$47.5m of its term debt in a mandatory asset sale payment, according to sources.
In order to allow Valeant to stave off default, lenders, as part of a credit agreement amendment negotiation earlier this year, pushed to require the specialty drug company to use net asset sale proceeds to prepay the term loan portion of the company’s US$31bn of debt.
The company, which on Tuesday also announced a first quarter net loss of US$373.7m, told lenders June 1 that it would make a payment to its Tranche B term loan holders on June 7 totaling US$47,497,159.53, according to sources. The prepayment was made on a pro-rata basis.
While the repayment does not make much of a dent in the company’s US$31bn of debt, it is a step in the right direction, investors said.
As of March 31, the company had a US$1.45bn revolving line of credit; a US$1.78bn A-3 term loan A; a US$939.4m A-4 term loan A; a US$1.089bn D-2 term loan B; a US$836.4m C-2 term loan B; a US$2.532bn E-1 term loan B and a US$4.047bn F term loan B, according to a June 7 regulatory filing. The company also has senior notes.
Management, in a call with analysts June 7, said the company aims to sell non-core assets and repay US$1.7bn of debt in 2016.
“We remain focused on reducing our permanent debt, which includes our term loans and bonds,” Linda LaGorga, Valeant treasurer, said on the call.
In April, Reuters reported Valeant brought in investment banks to review its options amid interest from buyout firms and other companies for a number of its businesses.
Citing continued challenges throughout 2016, the company slashed its revenue forecast for the year to a range of US$9.9bn to US$10.1bn from an earlier outlook range of US$11bn to US$11.2bn, according to a June 7 earnings news release. It also cut its adjusted earnings per share guidance to US$6.60 to US$7.00 from earlier guidance of US$8.50 to US$9.50.
“The first quarter’s results reflect, in part, the impact of significant disruption this organization has faced over the past nine months,” Chief Executive Joseph Papa, who took over from former head Michael Pearson, said in the news release.
A spokesperson for Barclays, the agent on the loan, declined to comment. A spokesperson for Valeant referred questions about the debt repayment to previous comments the company has made. (Reporting by Kristen Haunss; Editing By Michelle Sierra and Jon Methven)