Valeant Bond Investor Seeks Default
April 12 2016 - 06:30PM
Dow Jones News
A large holder of Valeant Pharmaceuticals International Inc.'s
bonds has called a default as a result of the Canadian drugmaker's
failure to file its annual report on time.
The notice is from private-equity firm Centerbridge Partners LP,
according to people familiar with the matter. Valeant confirmed the
request but didn't identify the debt holder.
The move starts a 60-day window, through June 11, during which
the embattled company would have to file its annual report or
potentially be forced to repay the bonds early. That could trigger
default notices in other pieces of Valeant's roughly $30 billion in
debt, analysts have said, and become a major additional
headache.
Valeant reiterated on Tuesday that it is on track to file the
annual report, which was due earlier this year, by April 29. That
would enable it to avoid a default.
Valeant shares declined 2.5% in after-hours trading on
investor's call for a bond default, which was first reported by The
Wall Street Journal. The stock finished up 63 cents at $31.98 in 4
p.m. trading on Tuesday.
New York-based Centerbridge owns about $250 million face value
of Valeant's $1 billion bond issue due 2023, some of the people
said. The notes have an annual coupon of 5.5%.
Holders of 25% of any single issuance of Valeant bonds can
declare a default under certain circumstances, such as when
financial statements aren't filed on time.
Creditors often threaten to call a default to win concessions in
negotiations with borrowers, rather than to force repayment.
Holders of Valeant loans already secured a fee from the company in
exchange for later filing deadlines and looser financial
conditions.
William Ackman, a Valeant board member and one of the company's
biggest shareholders, spoke with Centerbridge executives this
weekend to discuss the matter, some of the people said.
The move by Centerbridge shows how various stakeholders are
jockeying for position amid turmoil at the company. The shares have
lost 88% of their value from an August high as a result of a
backlash against its pricing of drugs, a reduced outlook and a
financial restatement that delayed the annual report. The company
is in the process of replacing its chief executive, Michael
Pearson.
Centerbridge manages about $25 billion. It was founded in 2005
by Jeff Aronson, a former distressed-debt investor at Angelo,
Gordon & Co., and Mark Gallogly, who once headed the
private-equity business at Blackstone Group LP. It manages
private-equity and credit assets on behalf of pensions and other
institutions.
Write to Liz Hoffman at liz.hoffman@wsj.com and Matt Jarzemsky
at matthew.jarzemsky@wsj.com
(END) Dow Jones Newswires
April 12, 2016 18:15 ET (22:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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