LONG-TERM DEBT

A summary of the Company’s consolidated long-term debt as of September 30, 2016 and December 31, 2015 is outlined in the table below:



	Maturity Date	As of September 30, 2016			As of December 31, 2015
Revolving Credit Facility⁽¹⁾	April 2018	$	1,100.0		$	250.0
Series A-1 Tranche A Term Loan Facility⁽¹⁾	April 2016	—			140.4
Series A-2 Tranche A Term Loan Facility⁽¹⁾	April 2016	—			137.3
Series A-3 Tranche A Term Loan Facility⁽¹⁾	October 2018	1,129.0			1,881.5
Series A-4 Tranche A Term Loan Facility⁽¹⁾	April 2020	763.0			951.3
Series D-2 Tranche B Term Loan Facility⁽¹⁾	February 2019	1,052.7			1,087.5
Series C-2 Tranche B Term Loan Facility⁽¹⁾	December 2019	808.2			835.1
Series E-1 Tranche B Term Loan Facility⁽¹⁾	August 2020	2,441.3			2,531.2
Series F Tranche B Term Loan Facility⁽¹⁾	April 2022	3,853.4			4,055.8
Senior Notes:
7.00%	October 2020	688.3			688.0
6.75%	August 2021	646.6			646.1
7.25%	July 2022	543.0			542.1
6.375%	October 2020	2,230.1			2,226.5
6.75%	August 2018	1,592.0			1,588.8
7.50%	July 2021	1,611.8			1,609.7
5.625%	December 2021	894.1			893.2
5.50%	March 2023	991.6			990.6
5.375%	March 2020	1,983.4			1,979.9
5.875%	May 2023	3,218.5			3,215.0
4.50%⁽²⁾	May 2023	1,668.8			1,611.8
6.125%	April 2025	3,217.1			3,214.3
Other⁽³⁾	Various	12.3			12.3
		30,445.2			31,088.4
Less current portion		(59.0		)	(823.0		)
Total long-term debt		$	30,386.2		$	30,265.4

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(1)	Together, the “Senior Secured Credit Facilities” under the Company’s Third Amended and Restated Credit and Guaranty Agreement, as amended (the “Credit Agreement”).


(2)	Represents the U.S. dollar equivalent of Euro-denominated debt (discussed below).


(3)	Relates primarily to the debentures assumed in the acquisition of B&L.

The Company’s Senior Secured Credit Facilities and indentures governing its senior notes contain customary affirmative and negative covenants, including, among other things, and subject to certain qualifications and exceptions, covenants that restrict the Company’s ability and the ability of its subsidiaries to: incur or guarantee additional indebtedness; create or permit liens on assets; pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness; make certain investments and other restricted payments; engage in mergers, acquisitions, consolidations and amalgamations; transfer and sell certain assets; and engage in transactions with affiliates. The indentures relating to the senior notes issued by the Company’s subsidiary Valeant contain similar covenants.

The Company’s Senior Secured Credit Facilities also contain specified financial maintenance covenants (consisting of a secured leverage ratio and an interest coverage ratio) and specified events of default. The Company’s and Valeant’s senior note indentures also contain certain specified events of default.

As of September 30, 2016, the Company was in compliance with all covenants related to the Company’s outstanding debt.

The total fair value of the Company’s long-term debt, with carrying values of $30.45 billion and $31.09 billion at September 30, 2016 and December 31, 2015, was $28.85 billion and $29.60 billion, respectively. The fair value of the Company’s long-term debt is estimated using the quoted market prices for the same or similar debt issuances (Level 2).

In the nine-month period ended September 30, 2016, the Company made long-term debt repayments of $1.92 billion, in the aggregate. Of this amount, $1.55 billion of term loan facilities was repaid, which consisted of (i) payments of the scheduled March, June, and September 2016 term loan amortization payments, resulting in an aggregate principal reduction of $419 million; (ii) final repayment of the maturities of the Series A-1 and Series A-2 Tranche A Term Loan Facilities, resulting in an aggregate principal reduction of $260 million; (iii) voluntary prepayments of the scheduled December 2016 and March and June 2017 term loan amortization payments, as well as the scheduled September 2017 loan amortization payment of the Series A-3 Tranche A Term Loan Facility, resulting in an aggregate principal reduction of $530 million; (iv) $62 million of prepayments of term loans from asset sale proceeds; and (v) additional voluntary prepayments of $275 million, in the aggregate, that were applied pro rata across the Company's term loans (of which $125 million represented an estimate of the mandatory excess cash flow payment for the fiscal year ended December 31, 2015 based on preliminary 2015 results at the time). During the nine-month period ended September 30, 2016, the net borrowings under the Company's revolving credit facility were $850 million. The Company did not repay any senior notes in the nine-month period ended September 30, 2016.

August 2016 Credit Agreement Amendment

On August 23, 2016, the Company entered into an amendment to its Credit Agreement (the “August 2016 amendment”). The August 2016 amendment reduces the minimum interest coverage maintenance covenant under the Credit Agreement to 2.00 to 1.00 for all fiscal quarters ending on or after September 30, 2016. Prior to the effectiveness of the August 2016 amendment, the minimum interest coverage maintenance covenant was 2.75 to 1.00 for any fiscal quarter ending June 30, 2016 through March 31, 2017 and 3.00 to 1.00 for any fiscal quarter ending thereafter. In addition, the August 2016 amendment permits the issuance of secured notes with shorter maturities and the incurrence of other indebtedness, in each case to repay term loans under the Credit Agreement. The August 2016 amendment also provides additional flexibility to sell assets, provided the proceeds of such asset sales are used to prepay loans under the Credit Agreement in accordance with its terms.

The August 2016 amendment increases each of the applicable interest rate margins under the Credit Agreement by 0.50%, which will apply until delivery of the Company’s financial statements for the fiscal quarter ending June 30, 2017. Thereafter, each of the applicable interest rate margins will be determined on the basis of a pricing grid tied to the Company’s secured leverage ratio, which has also been increased by 0.50% across the grid.

The August 2016 amendment was accounted for as a debt modification. As a result, payments to the lenders were recognized as additional debt discounts and are being amortized over the remaining term of each term loan.

April 2016 Credit Agreement Amendment

On April 11, 2016, the Company obtained an amendment and waiver to its Credit Agreement (the “April 2016 amendment”). Pursuant to the April 2016 amendment, the Company obtained an extension to the deadline for filing (i) the Company's 2015 Form 10-K to May 31, 2016 and (ii) the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (the “March 31, 2016 Form 10-Q”) to July 31, 2016. The April 2016 amendment also waived, among other things, the cross-default under the Credit Agreement to the Company's and Valeant's senior note indentures that arose when the 2015 Form 10-K was not filed by March 15, 2016, any cross default under the Credit Agreement that may have arisen under the Company's other indebtedness from the failure to timely deliver the 2015 Form 10-K, and the cross default under the Credit Agreement to the Company's and Valeant's senior note indentures that arose when the March 31, 2016 Form 10-Q was not filed by May 16, 2016 or any cross default under the Credit Agreement to the Company’s other indebtedness as a result of the delay in filing the March 31, 2016 Form 10-Q. The April 2016 amendment modified, among other things, the interest coverage financial maintenance covenant from 3.00 to 1.00 to 2.75 to 1.00 from the fiscal quarter ending June 30, 2016 through the fiscal quarter ending March 31, 2017. Certain financial definitions were also amended, including the definition of “Consolidated Adjusted EBITDA” which has been modified to add back fees and expenses in connection with any amendment or modification of the Credit Agreement or any other indebtedness, and to permit up to $175 million to be added back in connection with costs, fees and expenses relating to, among other things, Philidor-related matters and/or product pricing-related matters and any review by the Board and the Company’s ad hoc committee of independent directors (the “Ad Hoc Committee”) related to such matters. The April 2016 amendment also modified certain existing add-backs to Consolidated Adjusted EBITDA under the Credit Agreement, including increasing the add-back for (i) restructuring charges in any twelve-month period to $200 million from $125 million and (ii) fees and expenses in connection with any proposed or actual issuance of debt, equity, acquisitions, investments, assets sales or divestitures to $150 million from $75 million for any twelve month period ending on or prior to March 31, 2017.

The terms of the April 2016 amendment impose a number of restrictions on the Company and its subsidiaries until the time that (i) the Company delivers the 2015 Form 10-K (which was filed on April 29, 2016) and the March 31, 2016 Form 10-Q (which was filed on June 7, 2016) (such requirements, the "Financial Reporting Requirements") and (ii) the leverage ratio of the Company and its subsidiaries (being the ratio, as of the last day of any fiscal quarter, of Consolidated Total Debt (as defined in the Credit Agreement) as of such day to Consolidated Adjusted EBITDA (as defined in the Credit Agreement) for the four fiscal quarter period ending on such date) is less than 4.50 to 1.00, including imposing (i) a $250 million aggregate cap (the "Transaction Cap") on acquisitions (although the Transaction Cap does not apply to any portion of acquisition consideration paid for by either the issuance of the Company’s equity or the proceeds of any such equity issuance), (ii) a restriction on the incurrence of debt to finance such acquisitions and (iii) a requirement that the net proceeds from certain asset sales be used to repay the term loans under the Credit Agreement, instead of investing such net proceeds in real estate, equipment, other tangible assets or intellectual property useful in the business. In addition, the Company's ability to make investments, dividends, distributions, share repurchases and other restricted payments is also restricted and subject to the Transaction Cap until such time as the Financial Reporting Requirements are satisfied and the leverage ratio of the Company and its subsidiaries is less than 4.00 to 1.00 (unless such investments or restricted payments can fit within other existing exceptions set out in the Credit Agreement). The April 2016 amendment also increased the interest rate applicable to the Company's loans under the Credit Agreement by 1.00% until delivery of the Company's financial statements for the fiscal quarter ending June 30, 2017. Thereafter, the interest rate applicable to the loans will be determined on the basis of a pricing grid tied to the Company's secured leverage ratio. With the filing of the March 31, 2016 Form 10-Q on June 7, 2016, the Financial Reporting Requirements were satisfied in all respects.

The April 2016 amendment was accounted for as a debt modification. As a result, payments to the lenders were recognized as additional debt discounts and are being amortized over the remaining term of each term loan.

Notices of Default Under Senior Note Indentures

The Company's delay in filing the 2015 Form 10-K resulted in a violation of covenants contained in the Company's Credit Agreement and senior note indentures. On April 12, 2016, the Company received a notice of default from certain holders of its 5.50% Senior Notes due 2023 and, on April 22, 2016, the Company received additional notices of default from the trustee under the respective indentures governing the Company’s 5.375% Senior Notes due 2020 and 7.50% Senior Notes due 2021 and Valeant's 6.375% Senior Notes due 2020 and 7.250% Senior Notes due 2022. All defaults under the Credit Agreement resulting from the failure to timely deliver the 2015 Form 10-K were waived by the requisite lenders under the Credit Agreement by the April 2016 amendment, and the 2015 Form 10-K was filed within the extended timeframe granted to the Company as part of that amendment and waiver. The filing of the 2015 Form 10-K on April 29, 2016 cured in all respects the default under the Company’s senior note indentures triggered by the failure to timely file the 2015 Form 10-K.

The Company's delay in filing the March 31, 2016 Form 10-Q resulted in a violation of covenants contained in the Company's senior note indentures. On May 19, 2016, the Company received a notice of default from the trustee under the indenture governing the Company’s 5.50% Notes due 2023 and, on June 2, 2016, the Company received an additional notice of default from the trustee under the respective indentures governing the Company’s 7.50% Senior Notes due 2021 and Valeant's 7.250% Senior Notes due 2022. All defaults under the Credit Agreement resulting from the failure to timely deliver the March 31, 2016 Form 10-Q were waived by the requisite lenders under the Credit Agreement by the April 2016 amendment and the March 31, 2016 Form 10-Q was filed within the extended timeframe granted to the Company as part of that amendment and waiver. The filing of the March 31, 2016 Form 10-Q on June 7, 2016 cured in all respects the default under the Company’s and Valeant's senior note indentures triggered by the failure to timely file the March 31, 2016 Form 10-Q.

Senior Secured Credit Facilities

The effective rates of interest for the nine-month period ended September 30, 2016 and the applicable margins available as of September 30, 2016 on the Company's borrowings under the Senior Secured Credit Facilities were as follows:



			Margins
	Effective Interest Rate		Base Rate Borrowings		LIBO Rate Borrowings
Revolving Credit Facility	3.60	%	2.75	%	3.75	%
Series A-1 Tranche A Term Loan Facility⁽¹⁾	2.68	%	2.75	%	3.75	%
Series A-2 Tranche A Term Loan Facility⁽¹⁾	2.68	%	2.75	%	3.75	%
Series A-3 Tranche A Term Loan Facility	3.41	%	2.75	%	3.75	%
Series A-4 Tranche A Term Loan Facility	3.56	%	2.75	%	3.75	%
Series D-2 Tranche B Term Loan Facility⁽²⁾	4.28	%	3.25	%	4.25	%
Series C-2 Tranche B Term Loan Facility⁽²⁾	4.53	%	3.50	%	4.50	%
Series E-1 Tranche B Term Loan Facility⁽²⁾	4.45	%	3.50	%	4.50	%
Series F Tranche B Term Loan Facility⁽²⁾	4.69	%	3.75	%	4.75	%

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(1)	Fully repaid in the three-month period ended March 31, 2016.


(2)	Subject to a 1.75% base rate floor and a 0.75% LIBO rate floor.