RBC Capital analyst, Douglas Miehm, noted that Valeant (NYSE: VRX) announced it has agreed to amended terms with its lenders and the terms were generally in line with expectations. However, the analyst remains cautious on the company until the 10K is filed. No change to Sector Perform rating and reducing PT to $65 from $69.

Amendments to term loans will see 100bps increase in interest rate until certain financial metrics are met, 50bps increase thereafter. Following Valeant’s announcement on March 15th that it would seek amended credit terms from its lenders, the company announced several revisions including a 100bp increase in term loan interest rates (except Series D-2 T-B which increases 75 bps) until the outstanding financials are delivered and the quarter ended June 30 2017 is concluded at which point the rate can decrease by a maximum of 50bps related to Secured Leverage Ratio (SLR) tiering. The interest rate stays at the highest level until the SLR declines below 1.75x (drops 25 bps) and if below 1.25x drops another 25bps.

The analyst, had previously noted that he believed the announcement of bank debt amendments would be the first step towards share price recovery for VRX but now remains cautious until the 10k is filed even given a favourable Ad Hoc Committee outcome.

Valeant announced other previously described amendments to its debt terms including: (i) minimum interest coverage ratio covenant declines from 3.00x to 2.75x for any quarter between June 30, 2016 and March 31, 2017; (ii) deadline for 10-K filing will be extended to May 31, 2016; (iii) deadline for Q1/16 10-Q filing extended to July 31, 2016; (iv) restrictions on VRX's ability to make certain acquisitions – $250MM aggregate cap; (v) VRX will be required to apply substantially all net asset sale proceeds to prepay its term loans; (vi) add backs to EBITDA for restructuring from $125MM to $200MM, expenses related to share/debt issuance or divestitures from $75MM to $150MM plus $175MM for Philidor or pricing related matters; (vii) permitting VRX to incur up to $750MM of additional unsecured indebtedness and (viii) waiving cross default items.

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Shares of Valeant Pharmaceuticals closed at $31.35 yesterday.