Bausch Health: Can New SpinCo Financing Be Structured as a Double Dip?

On February 19, Bausch Health Companies, Inc. (the “Company” or “BHC”) filed its 2024 10-K (the “10-K”) with the SEC. In the 10-K, the Company disclosed that on February 11, 2025, BHC’s subsidiary 1261229 B.C. Ltd. (“SpinCo”) entered into a commitment with a third-party lender to provide a senior secured bridge loan facility in an aggregate principal amount of up to $700 million, subject to limitations based on the value of the collateral (the “Bridge Facility”).

In addition, the Company disclosed in its February 19 earnings call that it plans to access the capital markets in the first half of 2025, and that this financing could include pledging a portion of the Bausch + Lomb shares owned by the Company. The Company’s CFO also disclosed that while multiple options are being discussed, BHC is looking at replacing the Bridge Facility with a permanent structure in place to deal with 2027 maturities and beyond.

In light of these developments, we have received numerous inquiries as to whether the Bausch Health bond indentures would allow SpinCo to structure the new financing as a double dip-type financing using Bausch + Lomb equity in order to facilitate liability management.

In this report, we assume that:

• the Bridge Facility (or any capital markets debt that replaces it) will have SpinCo as the primary borrower/issuer
• SpinCo is and will remain an Unrestricted Subsidiary of BHC, and
• that SpinCo will continue to own (directly or through its ownership of the Holdco Issuer) all of the Bausch + Lomb equity held by BHC.

Based on those assumptions, in this report, we address whether the new SpinCo financing could be structured as a double-type financing that both (1) is secured by some or all of the Bausch + Lomb equity owned by SpinCo and (2) has first lien claims on assets that currently secure the existing BHC first lien debt.