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Valeant’s New Debt Agreement Comes With Freedom to Miss Forecast

  • Drugmaker also gets greater flexibility to sell off assets
  • Earnings can decline further without causing credit event

Valeant Pharmaceuticals International Inc.’s newly renegotiated agreement with lenders will let the drugmaker cut or miss financial projections that some analysts already thought it would struggle to meet.

Under its previous agreement with lenders, Valeant would have had to produce trailing 12-month adjusted Ebitda of at least $4.675 billion to avoid breaching its credit pact. The new agreement will let it get by with about $3.4 billion. Ebitda stands for earnings before interest, taxes, depreciation and amortization and is used as a measure of a company’s ability to pay off obligations.

Valeant reiterated its full-year financial projections on Aug. 9, saying it would have sales of $9.9 billion to $10.1 billion and adjusted Ebitda of $4.8 to $4.95 billion. Those projections will require Valeant to make a significant turnaround in the second half of the year.

Valeant didn’t immediately respond to a request for comment on whether it would cut guidance.

Earlier this month, David Maris, an analyst with Wells Fargo & Co., said it appeared unlikely that the company would make its projections. David Steinberg, an analyst with Jefferies, said meeting the...