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Valeant Seeks $4.05 Billion in Loans for Bausch & Lomb Purchase

Valeant Pharmaceuticals International Inc. is seeking $4.05 billion in loans to support its purchase of Bausch & Lomb Holdings Inc., according to a person with knowledge of the transaction.

Canada’s most acquisitive company is seeking a $3.55 billion term loan B and a $500 million term A piece, said the person, who asked not to be identified because the terms are private.

Proceeds of the loan and a $3.23 billion bond sale will support Valeant’s $8.7 billion acquisition and repay about $4.2 billion of the Warburg Pincus LLC-owned eye-care company’s borrowings, according to a May 30 regulatory filing. Canada’s most acquisitive company is expanding with debt-financed deals instead of making good on a September vow to trim leverage.

Standard & Poor’s assigned a BB rating to the proposed bank debt and lowered the company’s corporate grade to BB- from BB, it said in a report today. The ratings cut reflects the company’s leverage, or debt to earnings before interest, taxes, depreciation and amortization, which S&P estimates will be at 5.7 times after the transaction.

Valeant is proposing to pay interest on the seven-year B portion at 3.25 percentage points to 3.5 percentage points more than the London interbank offered rate with a 0.75 percent minimum on the lending benchmark, the person said. The loan is offered to lenders at 99.5 cents on the dollar.

Goldman Sachs Group Inc., JPMorgan Chase & Co., Bank of America Corp., Barclays Plc, Morgan Stanley and Royal Bank of Canada are arranging the debt, the person said. Lenders must let the banks know by June 16 if they will participate in the deal.

A term loan B is sold mainly to non-bank lenders such as collateralized loan obligations, bank loan mutual funds and hedge funds. A term loan A is sold mainly to banks. Libor is the rate at which banks say they can borrow from each other.

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