LONG-TERM DEBT

Long-term debt as of December 31, 2016 and 2015 consists of the following:



		2016				2015
(in millions)	Maturity Date	Principal Amount		Net of Discounts and Issuance Costs		Principal Amount		Net of Discounts and Issuance Costs
Revolving Credit Facility⁽¹⁾	April 2018	$	875	$	875	$	250	$	250
Series A-1 Tranche A Term Loan Facility⁽¹⁾	April 2016	—		—		141		140
Series A-2 Tranche A Term Loan Facility⁽¹⁾	April 2016	—		—		138		137
Series A-3 Tranche A Term Loan Facility⁽¹⁾	October 2018	1,032		1,016		1,910		1,882
Series A-4 Tranche A Term Loan Facility⁽¹⁾	April 2020	668		658		963		951
Series D-2 Tranche B Term Loan Facility⁽¹⁾	February 2019	1,068		1,048		1,109		1,088
Series C-2 Tranche B Term Loan Facility⁽¹⁾	December 2019	823		805		853		835
Series E-1 Tranche B Term Loan Facility¹⁾	August 2020	2,456		2,429		2,548		2,531
Series F Tranche B Term Loan Facility⁽¹⁾	April 2022	3,892		3,815		4,119		4,056
Senior Notes:
6.75%	August 2018	1,600		1,593		1,600		1,589
5.375%	March 2020	2,000		1,985		2,000		1,980
7.00%	October 2020	690		689		690		688
6.375%	October 2020	2,250		2,231		2,250		2,226
7.50%	July 2021	1,625		1,613		1,625		1,610
6.75%	August 2021	650		647		650		646
5.625%	December 2021	900		894		900		893
7.25%	July 2022	550		543		550		542
5.50%	March 2023	1,000		992		1,000		991
5.875%	May 2023	3,250		3,220		3,250		3,215
4.50%⁽²⁾	May 2023	1,578		1,563		1,629		1,612
6.125%	April 2025	3,250		3,218		3,250		3,214
Other	Various	12		12		12		12
Total long-term debt		$	30,169	29,846		$	31,437	31,088
Less: Current portion of long-term debt				1				823
Non-current portion of long-term debt				$	29,845			$	30,265

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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).

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 indentures also contain certain specified events of default.

As of December 31, 2016, the Company was in compliance with all financial maintenance covenants related to the Company’s outstanding debt. The Company continues to take steps to reduce its debt levels and improve profitability to ensure continual compliance with the financial maintenance covenants. The Company, based on its current forecast for the next twelve months from the date of issuance of these financial statements, expects to remain in compliance with these financial maintenance covenants after taking into consideration the effect of the divestitures of certain skincare products, for which regulatory approval has been received and is expected to close in early March 2017, and Dendreon Pharmaceuticals, Inc. ("Dendreon"), which is expected to be consummated in the first half of 2017. In the event that the divestiture of certain skincare products does not close as anticipated, or the Company performs below its forecasted levels, the Company will implement certain cost-efficiency initiatives, such as rationalization of SG&A and R&D spend, which would allow the Company to continue to comply with the financial maintenance covenants. Absent the impact of the actions described above, the Company would not comply with those financial maintenance covenants.

In addition, the Company is considering taking other actions, including seeking to amend its Senior Secured Credit Facilities or divesting other businesses as deemed appropriate, to provide additional coverage in complying with the financial maintenance covenants during the twelve-month period following the date of issuance of the financial statements and address future debt maturities.

The total fair value of the Company’s long-term debt, with carrying values of $29,846 million and $31,088 million at December 31, 2016 and 2015, was $26,297 million and $29,597 million, 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).

Annual maturities and mandatory amortization payments of long-term debt for the five succeeding years ending December 31 and thereafter are as follows. Aggregate payments in 2017 are less than $1 million.



(in millions)
2017	$	—
2018	3,738
2019	2,122
2020	7,723
2021	3,215
Thereafter	13,371
Total gross maturities	30,169
Unamortized discounts	(323		)
Total long-term debt	$	29,846

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 permitted 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 provided 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 increased 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 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 Annual Report on Form 10-K for the year ended December 31, 2015 (the “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 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 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.

Senior Secured Credit Facilities

On February 13, 2012, the Company and certain of its subsidiaries as guarantors entered into the Credit Agreement with a syndicate of financial institutions and investors.

2014 Activity

On February 6, 2014, the Company and certain of its subsidiaries as guarantors entered into a joinder agreement to reprice and refinance the Series E Tranche B Term Loan Facility by the issuance of $2,950 million in new term loans (the “Series E-1 Tranche B Term Loan Facility”). Term loans under the Series E Tranche B Term Loan Facility were either exchanged for, or repaid with the proceeds of, the Series E-1 Tranche B Term Loan Facility and proceeds of the additional Series A-3 Tranche A Term Loan Facility described below. The Series E-1 Tranche B Term Loan Facility has terms consistent with the Series E Tranche B Term Loan Facility. In connection with this transaction, the Company recognized a loss on extinguishment of debt of $94 million in the three-month period ended March 31, 2014.

Concurrently, on February 6, 2014, the Company and certain of its subsidiaries as guarantors entered into a joinder agreement for the issuance of $226 million in incremental term loans under the Series A-3 Tranche A Term Loan Facility. Proceeds from this transaction were used to repay part of the term loans outstanding under the Series E Tranche B Term Loan Facility.

In July 2014, the Company made principal payments of $1,000 million, in the aggregate, related to the Senior Secured Credit Facilities.

2015 Activity

On January 22, 2015, the Company and certain of its subsidiaries, as guarantors, entered into joinder agreements to allow for an increase in commitments under the Revolving Credit Facility to $1,500 million and the issuance of $250 million in incremental term loans under the Series A-3 Tranche A Term Loan Facility. The Revolving Credit Facility and the Series A-3 Tranche A Term Loan Facility terms remained unchanged.

On March 5, 2015, the Company entered into an amendment to the Credit Agreement to implement certain revisions in connection with the Salix Acquisition. The amendment, among other things, permitted the Salix Acquisition and the refinancing, repayment, termination and discharge of Salix's outstanding indebtedness, as well as the issuance of senior unsecured notes to be used to fund the Salix Acquisition (as described below). The amendment also modified the interest coverage ratio financial maintenance covenant applicable to the Company through March 31, 2016.

Concurrently with the Salix Acquisition on April 1, 2015, the Company obtained incremental term loan commitments in the aggregate principal amount of $5,150 million (the "Incremental Term Loan Facilities") under its existing Credit Agreement. The Incremental Term Loan Facilities, which were fully drawn in the second quarter of 2015, consist of (1) $1,000 million of tranche A term loans (the "Series A-4 Tranche A Term Loan Facility"), bearing interest at a rate per annum equal to, at the election of the Company, (i) the base rate plus a range between 0.75% and 1.25% or (ii) LIBO rate plus a range between 1.75% and 2.25%, in each case, depending on the Company's leverage ratio and having terms that are consistent with the Company's existing tranche A term loans and (2) $4,150 million of tranche B term loans (the "Series F Tranche B Term Loan Facility"), bearing interest at a rate per annum equal to, at election of the Company, (i) the base rate plus a range between 2.00% and 2.25% or (ii) LIBO rate plus a range between 3.00% and 3.25%, depending on the Company's secured leverage ratio and subject to a 1.75% base rate floor and 0.75% LIBO rate floor, and having terms that are consistent with the Company's existing tranche B term loans. These interest rates do not reflect the changes resulting from the April 2016 amendment or the August 2016 amendment. In connection with the issuance of the Incremental Term Loan Facilities, the Company incurred a total of approximately $85 million of costs and fees (treated as a deduction to Long-term debt), including an original issue discount of approximately $21 million.

The Series A-4 Tranche A Term Loan Facility is payable in quarterly installments at the rate of 5% per annum through March 31, 2016, then at the rate of 10% per annum through March 31, 2017, then at the rate of 20% per annum through maturity on April 1, 2020. The Series F Tranche B Term Loan Facility is payable in quarterly installments at the rate of 1% per annum through maturity on April 1, 2022. These amortization schedules do not reflect the effect of the voluntary term loan prepayments or prepayments of term loans from asset sale proceeds in 2016, as described below, which did not have a material impact on amortization amounts.

On May 29, 2015, the Company and certain of its subsidiaries, as guarantors, entered into Amendment No. 11 to the Credit Agreement to reprice the Series D-2 Tranche B Term Loan Facility. The applicable margins for borrowings under the Series D-2 Tranche B Term Loan Facility, as modified by the repricing, were initially 1.75% with respect to base rate borrowings and 2.75% with respect to LIBO rate borrowings. Then, commencing with the delivery of the financial statements of the Company for the fiscal quarter ending September 30, 2015, such margins were changed to between 1.50% and 1.75% for base rate borrowings and between 2.50% and 2.75% for LIBO rate borrowings, in each case, based on the secured leverage ratio of the Company for each fiscal quarter for which financial statements are delivered as required under the Credit Agreement, subject to a 1.75% base rate floor and a 0.75% LIBO rate floor. The applicable margins do not reflect the changes resulting from the April 2016 amendment or the August 2016 amendment. Costs and fees incurred in connection with the repricing of the Series D-2 Tranche B Term Loan Facility were nominal.

2016 Activity

In 2016, the Company made long-term debt repayments of $2,436 million, in the aggregate. Of this amount, $1,841 million of term loan facilities was repaid, which consisted of (i) payments of the scheduled 2016 term loan amortization payments, resulting in an aggregate principal reduction of $556 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 2017 term loan amortization payments, resulting in an aggregate principal reduction of $610 million; (iv) $140 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 year ended December 31, 2016, the net borrowings under the Company’s revolving credit facility were $625 million.

As of December 31, 2016, the remaining quarterly amortization payments for the Senior Secured Credit Facilities were as follows, starting on March 31, 2018: $99 million for the Series A-3 Tranche A Term Loan Facility; $48 million for the Series A-4 Tranche A Term Loan Facility; and $10 million for the Series F Tranche B Term Loan Facility. There are no remaining quarterly amortization payments for the Series D-2 Tranche B Term Loan Facility, the Series C-2 Tranche B Term Loan Facility and the Series E-1 Tranche B Term Loan Facility.

The effective rates of interest for the year ended December 31, 2016 and the applicable margins available as of December 31, 2016 on borrowings under the Senior Secured Credit Facilities were as follows:



	Effective	Margins
	Interest Rate	Base Rate Borrowings	LIBO Rate Borrowings
Revolving Credit Facility	3.76%	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	3.58%	2.75%	3.75%
Series A-4 Tranche A Term Loan Facility	3.71%	2.75%	3.75%
Series D-2 Tranche B Term Loan Facility⁽²⁾	4.46%	3.25%	4.25%
Series C-2 Tranche B Term Loan Facility⁽²⁾	4.71%	3.50%	4.50%
Series E-1 Tranche B Term Loan Facility⁽²⁾	4.65%	3.50%	4.50%
Series F Tranche B Term Loan Facility⁽²⁾	4.89%	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.

The loans under the Senior Secured Credit Facilities may be made to, and the letters of credit under the Revolving Credit Facility may be issued on behalf of, the Company. All borrowings under the Senior Secured Credit Facilities are subject to the satisfaction of customary conditions, including the absence of a default or an event of default and the accuracy in all material respects of representations and warranties.

In addition to paying interest on outstanding principal under the Senior Secured Credit Facilities, the Company is required to pay commitment fees of 0.50% per annum in respect of the unutilized commitments under the Revolving Credit Facility, payable quarterly in arrears. The Company also is required to pay letter of credit fees on the maximum amount available to be drawn under all outstanding letters of credit in an amount equal to the applicable margin on LIBO rate borrowings under the Revolving Credit Facility on a per annum basis, payable quarterly in arrears, as well as customary fronting fees for the issuance of letters of credit and agency fees.

Subject to certain exceptions and customary baskets set forth in the Credit Agreement, the Company is required to make mandatory prepayments of the loans under the Senior Secured Credit Facilities under certain circumstances, including from (a) 100% of the net cash proceeds of insurance and condemnation proceeds for property or asset losses (subject to reinvestment rights and net proceeds threshold), (b) 50% of the net cash proceeds from the issuance of equity securities subject to decrease based on leverage ratios, (c) 100% of the net cash proceeds from the incurrence of debt (other than permitted debt as defined in the Credit Agreement), (d) 50% of Consolidated Excess Cash Flow (as defined in the Credit Agreement) subject to decrease based on leverage ratios and (e) 100% of net cash proceeds from asset sales outside the ordinary course of business (subject to reinvestment rights, which were restricted by the terms of the April 2016 amendment.)

The Company is permitted to voluntarily reduce the unutilized portion of the revolving commitment amount and repay outstanding loans under the Revolving Credit Facility at any time without premium or penalty, other than customary “breakage” costs with respect to LIBO rate loans. As of December 31, 2016, the Company is permitted to voluntarily repay outstanding loans under the Tranche A Term Loan facilities and Tranche B Term Loan facilities at any time without premium or penalty, other than customary “breakage” costs with respect to LIBO rate loans.

The Company’s obligations and the obligations of the guarantors under the Senior Secured Credit Facilities and certain hedging arrangements and cash management arrangements entered into with lenders under the Senior Secured Credit Facilities (or affiliates thereof) are secured by first-priority security interests in substantially all tangible and intangible assets of the Company and the guarantors, including 100% of the capital stock of Valeant and each material subsidiary of the Company (other than Valeant’s foreign subsidiaries) and 65% of the capital stock of each foreign subsidiary of Valeant that is directly owned by Valeant or owned by a guarantor that is a domestic subsidiary of Valeant, in each case subject to certain exclusions set forth in the credit documentation governing the Senior Secured Credit Facilities.

Senior Notes

The senior notes issued by the Company are the Company’s senior unsecured obligations and are jointly and severally guaranteed on a senior unsecured basis by each of its subsidiaries that is a guarantor under the Senior Secured Credit Facilities. The senior notes issued by the Company’s subsidiary Valeant are senior unsecured obligations of Valeant and are jointly and severally guaranteed on a senior unsecured basis by the Company and each of its subsidiaries (other than Valeant) that is a guarantor under the Senior Secured Credit Facilities. Certain of the future subsidiaries of the Company and Valeant may be required to guarantee the senior notes.

If the Company experiences a change in control, the Company may be required to make an offer to repurchase each series of the senior notes discussed below, as applicable, in whole or in part, at a purchase price equal to 101% of the aggregate principal amount of the senior notes repurchased, plus accrued and unpaid interest to, but excluding, the applicable purchase date of the senior notes.

6.875% Senior Notes due 2018

On November 23, 2010, Valeant issued $1,000 million aggregate principal amount of 6.875% senior notes due December 2018 (the "December 2018 Notes") in a private placement. In connection with the December 29, 2014 redemption of $445 million aggregate principal amount of the December 2018 Notes for $463 million, including a call premium of $15 million, plus accrued and unpaid interest, the Company recognized a loss on the extinguishment of debt of $18 million in the three-month period ended December 31, 2014.

On February 17, 2015, Valeant redeemed the remaining $500 million aggregate principal amount of outstanding December 2018 Notes for $524 million, including a call premium of $17 million, plus accrued and unpaid interest, and satisfied and discharged the December 2018 Notes indenture. In connection with this transaction, the Company recognized a loss on extinguishment of debt of $20 million in the three-month period ended March 31, 2015.

7.00% Senior Notes due 2020

On September 28, 2010, Valeant issued $700 million aggregate principal amount of 7.00% senior notes due 2020 (the “October 2020 Notes”) in a private placement. The October 2020 Notes accrue interest at the rate of 7.00% per year, payable semi-annually in arrears.

Valeant may redeem all or a portion of the October 2020 Notes at the redemption prices applicable to the October 2020 Notes, as set forth in the October 2020 Notes indenture, plus accrued and unpaid interest to the date of redemption.

6.75% Senior Notes due 2021

On February 8, 2011, Valeant issued $650 million aggregate principal amount of 6.75% senior notes due 2021 (the “August 2021 Notes”) in a private placement. The August 2021 Notes accrue interest at the rate of 6.75% per year, payable semi-annually in arrears.

Valeant may redeem all or a portion of the August 2021 Notes at the redemption prices applicable to the August 2021 Notes, as set forth in the August 2021 Notes indenture, plus accrued and unpaid interest to the date of redemption.

7.25% Senior Notes due 2022

On March 8, 2011, Valeant issued $550 million aggregate principal amount of 7.25% senior notes due 2022 (the “2022 Notes”) in a private placement. The 2022 Notes accrue interest at the rate of 7.25% per year, payable semi-annually in arrears.

Valeant may redeem all or a portion of the 2022 Notes at the redemption prices applicable to the 2022 Notes, as set forth in the 2022 Notes indenture, plus accrued and unpaid interest to the date of redemption.

6.375% Senior Notes due 2020

On October 4, 2012, VPI Escrow Corp. (the “VPI Escrow Issuer”), a newly formed wholly owned subsidiary of Valeant, issued $1,750 million aggregate principal amount of 6.375% senior notes due 2020 (the “6.375% Notes”) in a private placement. The 6.375% Notes accrue interest at the rate of 6.375% per year, payable semi-annually in arrears. At the time of the closing of the Medicis acquisition, (1) the VPI Escrow Issuer merged with and into Valeant, with Valeant continuing as the surviving corporation, (2) Valeant assumed all of the VPI Escrow Issuer’s obligations under the 6.375% Notes and the related indenture and (3) the funds previously held in escrow were released to the Company and were used to finance the Medicis acquisition.

Valeant may redeem all or a portion of the 6.375% Notes at the redemption prices applicable to the 6.375% Notes, as set forth in the 6.375% Notes indenture, plus accrued and unpaid interest to the date of redemption.

Concurrently with the offering of the 6.375% Notes, Valeant issued $500 million aggregate principal amount of 6.375% senior notes due 2020 (the “Exchangeable Notes”) in a private placement, the form and terms of such notes being substantially identical to the form and terms of the 6.375% Notes, as described above.

On March 29, 2013, the Company announced that Valeant commenced an offer to exchange (the “Exchange Offer”) any and all of its Exchangeable Notes into 6.375% Notes. Valeant conducted the Exchange Offer in order to satisfy its obligations under the indenture governing the Exchangeable Notes with the anticipated result being that some or all of such notes would be part of a single series of 6.375% Notes under one indenture. The Exchange Offer, which did not result in any changes to existing terms or to the total amount of the Company’s outstanding debt, expired on April 26, 2013. All of the Exchangeable Notes were tendered in the Exchange Offer and exchanged for 6.375% Notes to form a single series.

6.75% Senior Notes due 2018 and 7.50% Senior Notes due 2021

On July 12, 2013, VPII Escrow Corp. (the “VPII Escrow Issuer”), a newly formed wholly-owned subsidiary of the Company, issued $1,600 million aggregate principal amount of 6.75% senior notes due 2018 (the “August 2018 Notes”) and $1,625 million aggregate principal amount of 7.50% senior notes due 2021 (the “July 2021 Notes”) in a private placement. The August 2018 Notes accrue interest at the rate of 6.75% per year, payable semi-annually in arrears. The July 2021 Notes accrue interest at the rate of 7.50% per year, payable semi-annually in arrears. At the time of the closing of the B&L Acquisition, (1) the VPII Escrow Issuer was voluntarily liquidated and all of its obligations were assumed by, and all of its assets were distributed to, the Company, (2) the Company assumed all of the VPII Escrow Issuer’s obligations under the August 2018 Notes and July 2021 Notes and the related indenture and (3) the funds previously held in escrow were released to the Company and were used to finance the B&L Acquisition.

The Company may redeem all or a portion of the August 2018 Notes at the redemption prices applicable to the August 2018 Notes, as set forth in the August 2018 Notes indenture, plus accrued and unpaid interest to the date of redemption. The Company may redeem all or a portion of the July 2021 Notes at the redemption prices applicable to the July 2021 Notes, as set forth in the July 2021 Notes indenture, plus accrued and unpaid interest to the date of redemption.

5.625% Senior Notes due 2021

On December 2, 2013, the Company issued $900 million aggregate principal amount of 5.625% senior notes due 2021 (the “December 2021 Notes”) in a private placement. The December 2021 Notes accrue interest at the rate of 5.625% per year, payable semi-annually in arrears.

The Company may redeem all or a portion of the December 2021 Notes at the redemption prices applicable to the December 2021 Notes, as set forth in the December 2021 Notes indenture, plus accrued and unpaid interest to the date of redemption.

5.50% Senior Notes due 2023

On January 30, 2015, the Company issued $1,000 million aggregate principal amount of 5.50% senior notes due 2023 ("2023 Notes") in a private placement. The 2023 Notes accrue interest at the rate of 5.50% per year, payable semi-annually in arrears.

The Company may redeem all or a portion of the 2023 Notes at any time prior to March 1, 2018 at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, plus a “make-whole” premium. In addition, at any time prior to March 1, 2018, the Company may redeem up to 40% of the aggregate principal amount of the outstanding 2023 Notes with the net proceeds of certain equity offerings at the redemption price set forth in the 2023 Notes indenture. On or after March 1, 2018, the Company may redeem all or a portion of the 2023 Notes at the redemption prices applicable to the 2023 Notes, as set forth in the 2023 Notes indenture, plus accrued and unpaid interest to the date of redemption.

5.375% Senior Notes due 2020, 5.875% Senior Notes due 2023, 4.50% Senior Notes due 2023 and 6.125% Senior Notes due 2025

On March 27, 2015, VRX Escrow Corp. (the "VRX Issuer"), a newly formed wholly owned subsidiary of the Company, issued $2,000 million aggregate principal amount of 5.375% senior notes due 2020 (the "2020 Notes"), $3,250 million aggregate principal amount of 5.875% senior notes due 2023 (the "May 2023 Notes"), €1,500 million aggregate principal amount of 4.50% senior notes due 2023 (the "Euro Notes”) and $3,250 million aggregate principal amount of 6.125% senior notes due 2025 (the "2025 Notes" and, together with the 2020 Notes, the May 2023 Notes and the Euro Notes, the "VRX Notes") in a private placement.

In addition, the VRX Issuer entered into an escrow and security agreement (the “Escrow Agreement”) dated as of March 27, 2015, with an escrow agent. Pursuant to the Escrow Agreement, the proceeds from the issuance of the VRX Notes, together with cash sufficient to fund certain accrued and unpaid interest on the VRX Notes, totaling $10,340 million in the aggregate, were deposited into escrow accounts and held as collateral security for the VRX Issuer’s obligations until the consummation of the Salix Acquisition, which occurred on April 1, 2015. At the time of the closing of the Salix Acquisition, (1) the VRX Issuer was voluntarily liquidated and all of its obligations were assumed by, and all of its assets were distributed to, the Company, (2) the Company assumed all of the VRX Issuer's obligations under the VRX Notes and the related indenture and (3) the funds previously held in escrow were released to the Company and were used to finance the Salix Acquisition (as such, the $10,340 million referenced in this paragraph was released from restricted cash and cash equivalents in April 2015.)

The 2020 Notes accrue interest at the rate of 5.375% per year, payable semi-annually in arrears. The May 2023 Notes and the Euro Notes accrue interest at the rate of 5.875% and 4.50% per year, respectively, payable semi-annually in arrears. The 2025 Notes accrue interest at the rate of 6.125% per year, payable semi-annually in arrears.

The Company may redeem all or a portion of the 2020 Notes, the May 2023 Notes, the Euro Notes and the 2025 Notes at any time prior to March 15, 2017, May 15, 2018, May 15, 2018 and April 15, 2020, respectively, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, plus a “make-whole” premium. In addition, at any time prior to March 15, 2017 in the case of the 2020 Notes, May 15, 2018 in the case of the May 2023 Notes, May 15, 2018 in the case of the Euro Notes and April 15, 2018 in the case of the 2025 Notes, the Company may redeem up to 40% of the aggregate principal amount of the applicable series of notes with the net proceeds of certain equity offerings at the redemption prices set forth in the applicable indenture. On or after March 15, 2017, May 15, 2018, May 15, 2018 and April 15, 2020, the Company may redeem all or a portion of the 2020 Notes, the May 2023 Notes, the Euro Notes and the 2025 Notes, respectively, at the redemption prices applicable to each series of such notes, as set forth in the applicable indenture, plus accrued and unpaid interest to the date of redemption.

Convertible Notes

The convertible notes assumed as of the acquisition date by the Company in connection with the Salix Acquisition consisted of two tranches: (i) 2.75% senior notes due May 15, 2015 (the “2.75% Convertible Notes”), with an outstanding principal amount of $345 million and (ii) 1.5% convertible senior notes due March 15, 2019 (the “1.5% Convertible Notes”), with an outstanding principal amount of $690 million.

In connection with the completion of the Salix Acquisition, the Company and the trustee of each of the convertible notes indentures entered into a supplemental indenture on April 1, 2015, providing that, at and after the effective time of the Salix Acquisition, the right to convert each $1,000 principal amount of any notes into cash, shares of common stock of Salix or a combination of cash and shares of common stock of Salix at the Company's election, has been changed to a right to convert each $1,000 principal amount of such notes into cash.

During the second quarter of 2015, all of the outstanding principal amount of the 2.75% Convertible Notes were settled in cash at an average price of $3,729.46 per $1,000 principal amount of the notes, plus accrued interest, and all of the outstanding principal amount of the 1.5% Convertible Notes, except for a nominal amount, were settled in cash at an average price of $2,663.26 per $1,000 principal amount of the notes.

Commitment Letters

In connection with the Salix Acquisition (see Note 3), the Company entered into a commitment letter dated as of February 20, 2015 (as amended and restated as of March 8, 2015, the “Salix Commitment Letter”), with a syndicate of banks, led by Deutsche Bank and HSBC. Pursuant to the Salix Commitment Letter, commitment parties committed to provide (i) incremental term loans pursuant to the Credit Agreement of up to $5,550 million and (ii) senior unsecured increasing rate bridge loans under a new senior unsecured bridge facility of up to $9,600 million. Subsequently, the Company obtained $15,250 million in debt financing comprised of a combination of the incremental term loan facilities under the Company's existing Credit Agreement in an aggregate principal amount of $5,150 million and the issuance of the Notes in the U.S. dollar equivalent aggregate principal amount of approximately $10,100 million, as described above. In the first quarter of 2015, the Company expensed $72 million of financing costs associated with the Salix Commitment Letter to Interest expense in the consolidated statement of (loss) income.

In addition, on March 27, 2015, the Company issued equity of approximately $1,450 million to fund the Salix Acquisition (see Note 13 for further information regarding the equity issuance).