Valeant Pharmaceuticals upsizes four-part bond deal to $10 billion, downsizes bank loan

By Paul A. Harris

Portland, Ore., March 12 – Valeant Pharmaceuticals International Inc. upsized its four-part offering of senior notes (B1/B) to $10 billion equivalent from $9.6 billion equivalent late Thursday, shifting $400 million of proceeds from its concurrent bank loan, according to a market source.

Earlier in the day the company set price talk.

The talk for each of the respective tranches came tighter than initial guidance levels, which were supplied by traders earlier in the week.

A tranche of dollar-denominated notes due on March 15, 2020, callable after two years at par plus 50% of the coupon, is talked to yield in the 5 3/8% area. Early guidance was 5½%.

A tranche of dollar-denominated notes due May 15, 2023, callable after three years at par plus 50% of the coupon, is talked to yield in the 6% area. Early guidance was 6¼%.

A tranche of euro-denominated notes due May 15, 2023, callable after three years at par plus 50% of the coupon, is talked to yield 4½% to 4¾%. Early guidance was 5%.

And a tranche of dollar-denominated notes due April 15, 2025, callable after five years at par plus 50% of the coupon, is talked to yield in the 6¼% area. Early guidance was 6½%.

Commitments were due at Thursday’s close.

Deutsche Bank Securities Inc. is the left bookrunner for the Rule 144A and Regulation S for life offering. HSBC Securities (USA) Inc., MUFG, DNB Markets Inc., SunTrust Robinson Humphrey Inc., Barclays, Morgan Stanley & Co. LLC, RBC Capital Markets and Citigroup Global Markets Inc. are the joint bookrunners.

BMO Securities, CIBC World Markets, SMBC Nikko and TD Securities are the co-managers.

The notes in all tranches come with initial call premiums that will be set at par plus 50% of the respective coupons. All tranches feature 40% equity clawbacks and 101% poison puts.

Proceeds will be used to help fund the acquisition of Salix Pharmaceuticals Ltd. for about $14.5 billion.

The issuing entity is special purpose vehicle VRX Escrow Corp.

Valeant is a Laval, Quebec-based specialty pharmaceutical company.

Salix is a Raleigh, N.C.-based developer and marketer of prescription pharmaceutical products and medical devices for the prevention and treatment of gastrointestinal diseases.

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