Business Context and Reporting Period
This Form 8-K was filed by Bausch + Lomb Corporation on September 11, 2023. The report details the launch of acquisition financing and updates to the preliminary purchase price allocation for the pending acquisition of XIIDRA and certain other ophthalmology assets.
Key Financial Metrics and Capital Structure
- Debt Issuance: The Company launched an offering of $1.4 billion aggregate principal amount of new senior secured notes due 2028.
- Term Loan Facility: The Company is seeking to enter into an incremental term loan facility, expecting to borrow $500 million in new Term B loans upon the closing of the acquisition.
- Use of Proceeds: Net proceeds are expected to fund the acquisition, pay related fees and expenses, and for general corporate purposes, including the repayment of existing debt.
- Liquidity and Cash Flow: The filing does not provide specific current cash flow, liquidity, or margin metrics. Proceeds from the notes will be held in a segregated escrow account if issued prior to the acquisition closing.
Material Changes and Adjustments
The Company updated its preliminary valuations for the pending acquisition, resulting in adjustments to the unaudited pro forma condensed combined financial information previously furnished on September 6, 2023:
- Balance Sheet Adjustments (as of June 30, 2023):
- Reduction in Prepaid expenses and other current assets: $22 million.
- Reduction in Other non-current liabilities: $12 million.
- Increase in Goodwill: $10 million.
- Income Statement Adjustments (Expense Reductions):
- Six months ended June 30, 2023: $20 million reduction.
- Year ended December 31, 2022: $43 million reduction.
- Six months ended June 30, 2022: $20 million reduction.
- Impact: Adjustments were primarily related to the amortization of intangible assets. Revenue and Adjusted EBITDA were not impacted.
Outlook, Risks, and Contingencies
- Acquisition Closing Condition: The closing of the Term Loan Facility is conditioned upon the completion of the acquisition and will occur concurrently.
- Note Redemption Risk: The closing of the Notes offering is not conditioned on the acquisition. However, if the acquisition does not occur on or prior to September 30, 2024, the Escrow Issuer must redeem the Notes at par plus accrued interest.
- Valuation Uncertainty: The valuation analysis of identifiable assets and liabilities is not yet complete. Current adjustments are preliminary and subject to further changes as additional information becomes available.
- Regulatory Status: The Notes are offered to qualified institutional investors under Rule 144A and Regulation S; they are not registered for public sale in the U.S. or Canada.
Investor Verification Checklist
- Verify the final closing date of the XIIDRA acquisition to assess the redemption risk of the $1.4 billion Notes.
- Monitor for final purchase price allocation updates, as current goodwill and liability figures are preliminary.
- Confirm the final terms and interest rates of the $500 million incremental Term B loans.
- Review the attached press release (Exhibit 99.1) for detailed terms of the senior secured notes.