Valeant Declines on Report That Drugmaker Faces Lender Pressure

  • Stock falls as much as 11% after report on debt talks
  • Lenders said to be pushing for new terms, Reuters reports

Valeant Pharmaceuticals International Inc. shares plunged as much as 11 percent on Thursday, dropping to prices last seen in January 2011 after a report that lenders are pressing for new terms.

The shares were down 9.6 percent to $30.42 at 1:30 p.m. in New York, and have fallen 56 percent this week. There was a wider selloff of health stocks on Thursday, with the Nasdaq Biotechnology Index down 2.1 percent.

Some of Valeant’s creditors are pushing for new terms after the drugmaker said it may breach some debt agreements if it can’t file its annual report in time, Reuters reported Thursday. The move in Valeant bonds was mixed. Its most actively traded security Thursday, $3.25 billion of 6.125 percent bonds maturing in 2025, was unchanged at 77.06 cents to yield 10.04 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Valeant’s shares have fallen 89 percent from their Aug. 5 peak of $262.52. In the past seven months, the company has been criticized for high drug prices, has been investigated by Congress and the U.S. Securities and Exchange Commission, had to cut ties with a mail-order pharmacy after disclosing an ownership interest in the business, and said it will restate some financial results. On Tuesday, the stock plunged 51 percent after the company released fourth-quarter results and reduced its sales and profit forecast for 2016.

Valeant was required to file its 10-K annual report before Wednesday to avoid a technical default under its credit agreement, and failed to do so. On a Tuesday call with investors, the company said it intends to begin working with lenders to adjust some of the debt agreements.

Valeant’s estimate that it won’t be able to reduce debt as quickly as it’d promised prompted Moody’s Investors Service to cut the drugmaker’s credit rating to B1, four steps below investment grade, from Ba3 following a review that began Feb. 29, the credit grader said Tuesday. The rating firm raised concern about operating uncertainties as well as risks facing the company given “limited opportunities” to raise prices on products.

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