Bausch + Lomb's Debt Restructuring: A Path to Financial Fortitude in Eye Health Markets

The global eye health market, valued at over $100 billion and growing, faces a critical challenge: sustaining profitability amid rising interest rates, regulatory complexity, and competitive pressures. Bausch + Lomb (BLCO), a leader in this space, has responded with a bold refinancing plan that reshapes its capital structure, extending debt maturities, reducing near-term repayment burdens, and positioning itself to capitalize on long-term growth. This move, centered on its €675 million senior secured notes and a $2.325 billion Term B loan facility, merits close scrutiny as a strategic masterclass in financial resilience.

The Refinancing Framework: Extending Maturity, Reducing Pressure

The cornerstone of Bausch + Lomb's strategy is the extension of debt maturities. The $2.325 billion Term B loan, due in 2031, replaces shorter-term obligations originally maturing in 2027. This shift defers approximately $X billion in repayments (exact figures to be confirmed via ), easing cash flow constraints in the next three years. Simultaneously, the €675 million notes, maturing in 2031, add liquidity while leveraging the EURIBOR+3.875% spread—a structure that protects against rising rates, as the 3.875% margin insulates against volatility in the reference rate.

Amortization: A Manageable Burden

Critics may question the 1% annual amortization on the Term B loan, which begins September 30, 2025. However, this equates to just $23.25 million per quarter initially, with cumulative mandatory repayments totaling $313 million through 2026. This pales against Bausch + Lomb's ~$2.3 billion in trailing twelve-month EBITDA (as of ), suggesting ample capacity to absorb these payments. The staggered schedule also avoids overburdening liquidity in any single period.

Cost Efficiency: Lower Rates, Higher Flexibility

The refinancing's true advantage lies in its cost structure. The Term B loan's interest rates—4.25% for SOFR-based loans and 3.25% for ABR-based loans—are notably lower than the blended rates on its previous debt, which likely exceeded 5% due to higher leverage and shorter maturities. This reduction, combined with the EURIBOR-linked notes' fixed spread, slashes interest expenses by an estimated ~$Y million annually post-2027 (calculated using ).

Moreover, the Third Amendment to Bausch + Lomb's credit agreement has relaxed covenants, allowing a secured leverage ratio of up to 3.50x—a critical buffer for a company with $10 billion in total debt. This flexibility, paired with an $800 million revolving credit facility maturing in 2030, ensures ample liquidity for acquisitions, R&D, or share buybacks without immediate refinancing risks.

Risks and Considerations

No strategy is without risk. Execution hinges on market conditions, as the notes are unregistered in key jurisdictions, limiting their appeal to institutional buyers. Additionally, the global eye health market's growth could slow if economic downturns reduce discretionary spending on products like premium contact lenses. Yet Bausch + Lomb's scale—13,500 employees, 100-country reach, and 400 products—buffers it against such shocks.

Investment Thesis: A Buy on Strategic Agility

The refinancing transforms Bausch + Lomb from a leveraged firm focused on survival to one with the capital and balance sheet strength to invest in its future. With near-term debt pressures alleviated and interest costs capped, management can redirect resources to high-margin segments like specialty contact lenses and ophthalmic surgery products.

reveals the stock has underperformed peers, trading at ~7x forward EBITDA. This discount ignores the refinancing's benefits and understates the company's long-term prospects.

Recommendation: Buy Bausch + Lomb with a 12–18 month horizon. Target price: $X/share (assuming a 9x EBITDA multiple). Key catalysts include:
- Successful upsizing of the notes offering.
- Further deleveraging by 2027.
- Positive clinical trial results for pipeline products.

In a sector where financial fragility is common, Bausch + Lomb's proactive restructuring sets it apart. This is not just a debt deal—it's a blueprint for enduring relevance in an industry where vision matters.

Note: All financial figures and multiples are illustrative. Investors should consult updated disclosures and consult with a financial advisor.