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Valeant shares plunge on risk of default on bonds

Valeant Pharmaceuticals International Inc.’s shares plunged to their lowest point in months on Tuesday after Bausch & Lomb Inc.’s parent said delay of its annual report is putting it in danger of defaulting on bonds.

Valeant stock (NYSE: VRX) on Tuesday was trading at $34.35, down $34.67. That is an 87 percent plunge from its August 2015 $262.52-a-share peak.

Because it failed to file a 2015 form 10-K with the Securities and Exchange Commission by March 15, it runs the risk of defaulting on some notes, Valeant states in a filing with the Securities and Exchange Commission. Such a declaration by one note holder could lead others to follow suit, the filing states.
 
While its 10-K remains delayed while it continues to work out restatements of 2015 and 2014 results, Valeant on Tuesday preliminarily reported a fourth-quarter loss of $336 million, or 98 cents a share, on revenues of $2.8 billion.

Valeant had earlier revealed it had wrongly booked some $53 million in sales in 2014 that should have been reported as 2015 income. It blamed the misstatement on dealings with Philidor Rx Services LLC.

Questions raised by a short seller over Valeant’s relationship with Philidor, a specialty pharmacy Valeant once planned to acquire but has since severed relations with, touched off a cascade of ills last year that have since played hob with Valeant’s stock price.

Also plaguing Valeant are ongoing Congressional and Justice Department investigations of its pricing policies and a Federal Trade Commission antitrust probe of a contact-lens related acquisition.

The company’s ills could lead his hedge fund—Valeant’s third-largest shareholder—to push Valeant to sell off at least part of Bausch & Lomb or make management changes, Pershing Square Capital Management L.P. CEO William Ackman said last week.

“The challenges of the past few months are not yet behind us and our goal for 2016 is to better balance our priorities across all of our constituencies—physicians, patients, employees, payors, debt holders and shareholders,” Valeant CEO Michael Pearson said Tuesday.
    
(c) 2016 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.
 

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