August 9, 2016 / 8:12 PM / 2 years ago

LPC: Valeant loans rise after CEO says company to seek debt amendment

NEW YORK, Aug 9 (Reuters) - Valeant Pharmaceuticals International’s loans traded up Tuesday after the company’s chief executive officer said it would seek to modify covenants on its $31 billion of debt.

The company obtained an amendment earlier this year to help stave off default, allowing it additional time to file its financial statements with securities regulators. Specific details of the proposed amendment request have not been released.

Joe Papa, Valeant’s CEO, said on a conference call Tuesday that the company will seek to modify the interest financial maintenance coverage covenant on its bank debt, according to a transcript of the call. Valeant, which is currently in compliance with its covenants, will begin the amendment process “shortly,” he said.

Following the news, the company’s $3.88 billion F tranche term loan was quoted at 99.75-100.125 Tuesday, an increase from 98.375-98.875 Monday, according to sources.

Valeant’s $2.45 billion E tranche term loan was quoted at 99.5-99.875 Tuesday, an increase from 97.75-98.25 Monday, the sources said.

The company announced 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 an earnings release.

A spokesperson for Valeant did not immediately return a telephone call seeking comment. A spokesperson for Barclays, the bank that arranged the loan amendment earlier this year, declined to comment.

Papa said during the call that the company’s bank debt is raised in every meeting he has with shareholders and analysts.

“Once the amendment is complete, I am looking forward to spending more time talking about our products, improving patients’ lives, our growth trajectory, and pipelines, and less about our bank debt,” he said on the call.

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 the earnings release. The company also had $19.26 billion of senior notes.

The company said it repaid $1.29 billion of debt in 2016, according to an earnings presentation.

Earlier this year Valeant obtained an amendment and waiver from lenders, which reduced its minimum interest coverage ratio covenant, according to an April 11 regulatory filing.

As part of the amendment, the interest rate paid to lenders was increased and Valeant agreed to use all net asset sale proceeds to repay the term loan portion of its debt, according to the filing. In June the company repaid about $47.5 million of its term debt in a mandatory asset sale payment. (Reporting by Kristen Haunss; Editing By Lynn Adler and Jon Methven)

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