The Single Most Important Catalyst for Valeant Pharma (VRX) Near-Term...
Valeant Pharma (NYSE: VRX) is down 15% after posting unaudited fourth quarter result and disappointing 2016 guidance. However, according to Evecore ISI analyst Umer Raffat, the single most important catalyst for Valeant near-term is timing for covenants/10-K filing to avoid default .
The all-important date of a default is March 30th + 30 days, so April 29.
Covenant language:
Under the various indentures governing the Company's outstanding notes, if the Company does not file the Form 10-K by March 15, 2016, the Company will be in breach of the reporting covenant in the indentures and the trustee or holders of at least 25% of any series of notes may deliver a notice of default. The Company then would have 60 days from the date of receipt of a notice of default to file the Form 10-K and thereby cure the default. If the Company does not cure the default by the end of the 60-day period, the notes may be accelerated by the trustee or holders of at least 25% of the series of notes that provided the notice of default. The acceleration of one series of notes could result in a cross acceleration to other outstanding series of notes.
The occurrence of a default under the notes would result in a cross default under the Company's bank credit agreement. The banks would be able to accelerate the loans under the credit agreement as a result of this default only in the event the Company does not file the Form 10-K before the 60-day cure period described above expires. In addition, if the Company does not file the Form 10-K by March 30, 2016, a default will occur under the Company's bank credit agreement. The Company then would have 30 days to cure the default. The banks would be able to accelerate the loans under the credit agreement as a result of this default only in the event the Company does not file the Form 10-K before the 30-day cure period expires. During the pendency of a default under the credit agreement (including a cross-default stemming from a breach of the reporting covenant in the note indentures caused by the Company's failure to file the Form 10-K by March 15, 2016), the Company would not be able to draw on the revolver.