Valeant Sinks Deeper Into Junk as Moody's Lowers Ratingby
Valeant Pharmaceuticals International Inc.’s junk debt ratings were lowered for the second time this month by Moody’s Investors Service after the company said it will replace its chief executive officer and add Bill Ackman to its board.
The drug maker’s B1 rating was cut to B2, or five steps below investment grade, Moody’s said in a statement Thursday. The ratings company had reduced the ranking on Valeant’s $31 billion of debt to B1 from Ba3 on March 15.
The downgrade “reflects a combination of operating headwinds, CEO and board changes occurring at a time of elevated financial leverage, and regulatory scrutiny," Michael Levesque, a senior vice president at Moody’s, said in the statement.
“Our business continues to be strong. We are committed to paying down debt in 2016 and we intend to file our 10-K on or before April 29, 2016,” Laurie Little, a spokeswoman for Valeant, said Thursday.
Valeant is also asking its lenders to extend the deadline for its annual 2015 financial statement to May 31 from March 30 and to waive a default under its credit agreement.
The drug maker is offering creditors a one-time fee and extra interest on its loans.
The company announced this month that CEO Michael Pearson will step down and Ackman, the billionaire investor whose hedge fund has lost hundreds of millions betting on Valeant, will join its board.
The company’s shares have fallen 75 percent this year as it cut its 2016 guidance and had to correct its earnings forecast. Valeant has been under scrutiny over its drug pricing practices and its relationship with a mail-order pharmacy, which critics say it was using to artificially to boost sales.