Valeant Pharmaceuticals volatile on accusatory research report; Affordable Care revised

By Sara Rosenberg

New York, Oct. 21 – Valeant Pharmaceuticals International Inc.’s term debt seesawed around during Wednesday’s trading session after a short-selling research firm put out a report alleging massive fraud at the company, which Valeant later denied.

Over in the primary market, Affordable Care Inc. minimally upsized its first-lien term loan, raised pricing and widened the original issue discount, and Alpha Media released price talk on its first-lien term loan in connection with its bank meeting.

Valeant bounces around

Valeant Pharmaceuticals’ term debt fell dramatically in trading on Wednesday as Citron Research put out a damaging report accusing the company of possible Enron-like fraud and then rebounded slightly after the company called the report “erroneous”, according to market sources.

By late afternoon, the term loan F was quoted at 93½ bid, 94½ offered, after hitting as low as 89 bid earlier in the session, one source said. On Tuesday, he saw the F loan quoted at 97¾ bid, 98½ offered.

“The short seller put out their report, the stock plunged, loans and bonds dropped a lot. The company put out their rebuttal, the stock recovered a lot, loans and bonds did too, but none of the three is close to yesterday’s price. Personally, I thought the short-seller’s piece lacked in detail and was strong on assertion without a clear basis,” the source continued.

Closer to the end of the day, a different source was quoting the Laval, Quebec-based specialty pharmaceutical company’s term loan F at 94½ bid, 95½ offered. He put Tuesday’s levels at 97¾ bid, 98 offered.

The Citron report accused Valeant of creating “phantom captive pharmacies” and creating “invoices to deceive the auditors and book revenue” to which Valeant responded that there is no fraud and that sales are recorded only when the product is dispensed to the patient, not when shipped to pharmacies.

Affordable Care reworked

Moving to the primary market, Affordable Care increased its first-lien term loan (B2/B-) to $328.25 million from $325 million, lifted pricing to Libor plus 475 bps from talk of Libor plus 425 bps to 450 bps and moved the original issue discount to 98 from 99, according to a market source, who said the 1% Libor floor was unchanged.

Recommitments were due at 3 p.m. ET on Wednesday, the source added.

The company’s now $503.25 million credit facility also includes a $40 million revolver (B2/B-), and a $135 million second-lien term loan that has been privately placed.

Jefferies Finance LLC and Golub Capital are leading the deal that will be used to help fund the buyout of the company by Berkshire Partners LLC from American Capital.

Affordable Care is a dental practice management services company.

Alpha Media reveals talk

Alpha Media held its bank meeting on Wednesday, and guidance on its $265 million first-lien term loan (B1/B) was announced at Libor plus 475 bps to 500 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for six months, a market source said.

Commitments are due on Nov. 4, the source added.

The company’s $350 million credit facility also includes a $20 million revolver (B1/B) and a $65 million second-lien term loan that has been privately placed.

Citizens Bank is leading the deal that will be used to fund the acquisition of radio stations from Digity LLC.

Closing is subject to approval by the Federal Communications Commission and the Department of Justice.

Alpha Media is a Portland, Ore.-based radio broadcast media company.

Concordia closes

In other news, Concordia Healthcare Corp. completed its acquisition of Amdipharm Mercury Ltd. from Cinven, which was funded with a roughly $2,065,000,000 secured credit facility (B+), $180 million of bridge loans, $790 million of notes, $520 million of proceeds raised from a recent public equity offering and cash on hand, according to a news release.

The credit facility consists of a $200 million revolver, a $1.1 billion six-year term loan and a £500 million six-year term loan.

Pricing on the U.S. term loan is Libor plus 425 bps with a 1% Libor floor, and it was issued at an original issue discount of 94.5. The debt has 101 soft call protection for one year.

The sterling term loan is priced at Libor plus 475 bps with a 1% Libor floor and was issued at a discount of 93.5. This tranche has 101 soft call protection for one year.

Concordia lead banks

Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Jefferies Finance LLC and RBC Capital Markets are leading Concordia’s credit facility.

During syndication, pricing on the U.S. term loan was set at the high end of the Libor plus 400 bps to 425 bps talk and the original issue discount firmed at the tight end of revised talk of 93.5 to 94.5 and wide of initial talk of 99, and the spread on the sterling term loan firmed at the high end of the Libor plus 450 bps to 475 bps talk while the discount finalized at the wide end of the revised talk of 93.5 to 94.5 and wide of initial talk of 99.

Also during syndication, the call protection on both term loans was extended from six months, maturities were shortened from seven years, amortization was revised to 1% in year one, 2.5% in years two and three and 5% per annum thereafter, the MFN sunset was eliminated and the incremental allowance was cut to $250 million from $500 million.

Concordia is an Oakville, Ont.-based health care company focused on legacy pharmaceutical products and orphan drugs. Amdipharm is a London-based pharmaceutical company.

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