Bausch Health: Initial Impressions on the New Proposals

On March 3, our sister company LFI reported that a group of outside investors led by Seaport Global and Paul Hastings have put forth two separate proposals to address the Bausch Health Companies, Inc. capital structure. In this report, we refer to Bausch Health Companies, Inc. as the “Company” or “BHC,” and we refer to the Company without giving effect to the Bausch + Lomb business as “RemainCo.”

The first proposal (“Proposal 1”) reportedly consists of a $4 billion equity rights offering which would be backed by the outside investor group and open to existing shareholders. The offering reportedly targets addressing BHC’s shorter-dated debt maturities to create runway while improving the Company’s credit profile with a much-needed cash injection. Reportedly, the investor group is prepared to provide at least $2 billion of the rights offering and is open to participation in the offering from creditors in the bondholder co-op group.

The second proposal (“Proposal 2”) reportedly consists of a $4 billion, three-year, zero coupon bond in which all of the Company’s equity in B+L would be pledged as collateral on a 70% LTV basis. We collectively refer to Proposal 1 and Proposal 2 in this report as the “Proposals.”

Each Proposal reportedly contemplates spinning off Bausch + Lomb Corporation (“B+L”) as part of the transactions. In this report, we provide our initial impressions on the new Proposals and the potential implications of these Proposals on the existing BHC bonds and the Holdco bonds. As it is unclear whether the Company’s Credit Agreement would be refinanced and/or amended in connection with either Proposal, we generally do not address the provisions of the Company’s Credit Agreement in this report.