Valeant Pharmaceuticals (VRX) – Yet Another Wild Day

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Valeant (VRX) another day and more news yet again – Valeant has turned to investment banks that include Goldman Sachs and Centerview Partners Holdings , according to Reuters. Rember. Late yesterday, Valeant confirmed that it had received a notice of default from one of its bond holders, purportedly an entity called Centerbridge Partners L.P. The notice of default does not accelerate any of Valeant’s indebtedness, and under the covenants Valeant currently has in place with its creditors, the company has 60 days to cure the condition that led to the default notice, namely the delay in the filing of its 2015 Form 10-K. Accordingly, we note that the default condition would be cured as long as Valeant files its Form 10-K by June 11, 2016. Since the company has previously repeatedly stated its intent to file the 10-K by the end of this month, we believe that it is highly unlikely that this notice would lead to an actual default, notes Rodman. Note the same company who called for default is involved in some possible transaction.

Reuters reports further:

Valeant Pharmaceuticals has brought in investment banks to review its options amid interest from buyout firms and other companies in a number of its businesses, according to people familiar with the matter.

While Valeant has not decided to sell any major business thus far, the move represents the clearest indication yet that the Canadian drug maker needs to divest assets to bolster its finances, the people said this week.

Not much other info so yet again some confusion once again!

And S&P has downgraded the company’s credit

“We continue to believe the value of the company’s assets likely exceeds the total debt outstanding, and we view that as supportive of creditworthiness,” S&P said in a statement. “Still, that benefit is limited by the company’s ability to monetize assets in an expeditious manner.”‘

Back to the default issue, JPMorgan opines:

We continue to see a 10-K filing as the key catalyst; watching for any updates around succession planning. The company continues to expect filing on or before April 29th, which would alleviate concerns around the risk of a default and around the company’s accounting restatements (which we see contained to the disclosed late 2014/early 2015 treatment of Philidor revenue recognition). Besides the 10-K filing, we are watching for any updates around succession planning and any commentary around the direction the Board seeks to take the company (incl. potential asset sales).

On the sales front Jefferies states:

Jublia growth remained solid (76754 TRxs, +46.3% Y/Y) and assuming a 70% GtN rebate the drug appears on track to hit $54M in Q1 sales (vs $60M JEF). Xifaxan 550mg continued to grow nicely in Mar (72536 TRxs, +27.9% Y/Y) and assuming no inventory
drawdown and a 35-40% GtN rebate, the drug could deliver $266-288M in Q1 sales.

Tomorrow should be another fun day for VRX – stay tuned!



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