8-K: Bausch Health Completes $1.6B Debt Exchange, Boosts B+L Pledge

Bausch Health Companies Inc. and its subsidiary completed an exchange offer, issuing $1.6 billion in new 10.00% Senior Secured Notes due 2032 and increasing the pledged Bausch + Lomb shares to 60%.

Summary

• Bausch Health Companies Inc. (BHC) and its indirect wholly owned subsidiary, 1261229 B.C. Ltd. (the Issuer), completed previously announced exchange offers on December 26, 2025.
• The offers involved exchanging BHC's outstanding 4.875% Senior Secured Notes due 2028 and 11.00% Senior Secured Notes due 2028 for up to $1.6 billion aggregate principal amount of new 10.00% Senior Secured Notes due 2032 (New Notes).
• The Issuer issued an aggregate principal amount of $1.6 billion of New Notes, which form a single series with the existing $4.4 billion principal amount of 10.00% Senior Secured Notes due 2032, bringing the total to $6.0 billion.
• The New Notes accrue interest from October 15, 2025, and were issued for consideration as set forth in the Exchange Offer Memorandum dated November 24, 2025.
• In connection with the issuance of the New Notes, an additional 26,495,472 common shares of Bausch + Lomb Corporation were transferred to the Issuer and pledged as security.
• The total pledged Bausch + Lomb common shares now amount to 211,963,893, representing approximately 60% of the outstanding common shares of Bausch + Lomb, up from an initial pledge of 52.5% (185,468,421 shares).
• The New Notes and Existing Numberco Notes are secured by a first priority lien on substantially all assets of the Issuer and other guarantors, including the 60% equity interest in Bausch + Lomb.

Sentiment

Score: 5

Explanation: The completion of the debt exchange offers some certainty regarding Bausch Health's debt maturity profile, which is a positive for debt management. However, the high 10% interest rate on the new notes and the increased pledge of 60% of Bausch + Lomb shares as collateral highlight ongoing financial strain and significant collateral requirements, balancing out any positive sentiment from the debt restructuring.

Positives

• The completion of the exchange offer provides clarity and finality to a significant debt restructuring initiative, managing the maturity profile of existing debt.
• The issuance of new senior secured notes helps to refinance existing obligations, potentially extending the maturity of some debt.

Negatives

• The new notes carry a high interest rate of 10.00%, which will result in substantial interest expenses for the company.
• An increased pledge of Bausch + Lomb shares, now totaling 60% of outstanding common shares, reduces Bausch Health's direct equity flexibility and control over a key asset.

Risks

• The New Notes have not been and will not be registered under the Securities Act of 1933 or any state securities law, limiting their immediate liquidity and transferability for certain investors.
• The high 10.00% interest rate on the new senior secured notes indicates a higher perceived credit risk by the market, potentially impacting future borrowing costs.
• The substantial pledge of 60% of Bausch + Lomb shares as collateral could limit Bausch Health's strategic options regarding Bausch + Lomb in the future.

Future Outlook

The New Notes will bear interest from October 15, 2025. New Notes sold under Regulation S of the Securities Act will have a restricted period of at least 40 days after the Settlement Date, after which their CUSIP and ISIN numbers will become fungible with the Initial Notes.

Management Comments

• William N. Woodfield, Senior Vice President and Treasurer of 1261229 B.C. Ltd. and Bausch Health Companies Inc., signed the Second Supplemental Indenture.
• Jeremy M. Lipshy, Senior Vice President, Tax of 1261229 B.C. Ltd. and Vice President of V-BAC Holding Corp., signed the Second Supplemental Indenture.
• Jean-Jacques Charhon, Executive Vice President, Chief Financial Officer of Bausch Health Companies Inc., signed the Second Supplemental Indenture and the 8-K report.

Industry Context

Bausch Health operates in the pharmaceutical and medical device industry, an sector often characterized by high R&D costs and significant debt loads for companies undergoing restructuring or M&A activities. This debt exchange reflects Bausch Health's ongoing efforts to manage its substantial leverage, a common theme for the company. The high 10% interest rate on the new secured notes suggests that the company continues to face challenges in accessing lower-cost capital, indicative of its credit profile within the broader healthcare industry.

Comparison to Industry Standards

• The 10.00% interest rate on senior secured notes is significantly higher than typical rates for investment-grade pharmaceutical or medical device companies, which often secure debt in the 3-6% range. This indicates a higher perceived credit risk for Bausch Health compared to industry leaders like Johnson & Johnson or Pfizer.
• Pledging 60% of Bausch + Lomb Corporation's common shares as collateral is a substantial use of a key asset. While common for highly leveraged companies, it is a higher percentage than typically seen for companies with strong balance sheets, which might use a smaller portion of equity in subsidiaries or rely more on general corporate assets for secured debt.

Corporate Governance

Stakeholder Impact

• Shareholders of Bausch Health Companies Inc. may experience increased debt servicing costs due to the 10.00% interest rate on the new notes, potentially impacting future earnings. The increased pledge of Bausch + Lomb shares also reduces BHC's direct equity flexibility.
• Holders of the exchanged 4.875% and 11.00% Senior Secured Notes due 2028 have exchanged their holdings for 10.00% Senior Secured Notes due 2032, extending their maturity but at a potentially different interest rate.
• New noteholders (including those who participated in the exchange) now hold 10.00% Senior Secured Notes due 2032, secured by a first priority lien on substantially all assets of the Issuer and other guarantors, including 60% of Bausch + Lomb shares.

Next Steps

• The New Notes will bear interest from October 15, 2025.
• New Notes sold under Regulation S will be subject to a restricted period of at least 40 days after the Settlement Date, after which they will become fungible with the Initial Notes.

Key Dates

Recommendation

The completion of the debt exchange offers some clarity on Bausch Health's debt structure, but the high 10% interest rate on the new notes and the increased pledge of Bausch + Lomb shares as collateral highlight persistent financial challenges. While the company is actively managing its debt, these terms suggest ongoing credit risk. Investors should hold to observe the impact of these refinancing efforts on the company's overall financial health and future strategic options, particularly concerning Bausch + Lomb. The move is a necessary step in debt management but doesn't fundamentally alter the high-leverage profile.

Keywords

Bausch Health, BHC, Debt Exchange, Senior Secured Notes, Bausch + Lomb, Corporate Debt, SEC Filing, 8-K, Indenture, Collateral, Debt Restructuring, Refinancing