Bausch + Lomb's Debt Restructuring: A Strategic Pivot to Fuel Growth Amidst Debt Headwinds

Bausch + Lomb, a global leader in eye care products, has undertaken a major debt refinancing initiative in 2025 that reshapes its capital structure, reduces near-term financial pressure, and unlocks potential for long-term growth. The $7.9 billion refinancing package—comprising upsized senior notes, new credit facilities, and subsidiary-level financing—marks a bold move to extend debt maturities, cut leverage, and position the company for sustained success in a competitive market. Here's why investors should pay close attention.

The Refinancing Breakdown: A Multi-Layered Strategy

The restructuring centers on three pillars:
1. Senior Secured Notes: Bausch Health (the parent company) issued $4.4 billion of 10% senior secured notes due 2032, upsized from an initial $4.0 billion. The proceeds were used to repay existing debt, including multiple notes maturing in 2025–2028.
2. Credit Facilities: A $500 million revolving credit facility and a $3.0 billion term loan B facility provide liquidity and flexibility.
3. Bausch + Lomb's Subsidiary Financing: The subsidiary raised €675 million through floating-rate notes (EURIBOR +3.875%) and secured a $2.325 billion term loan, refinancing older debt and reducing reliance on short-term maturities.

The transactions closed on April 8 and June 26, 2025, after overcoming customary conditions. By extending debt maturities and consolidating obligations, Bausch Health aims to reduce annual interest expenses and free up cash flow for innovation and acquisitions.

Strategic Benefits: Alleviating Pressure, Building Flexibility

The refinancing addresses three critical pain points:
1. Debt Overhang: Bausch Health's 2024 net debt reduction of $1 billion was a start, but $7.9 billion in new financing now permanently reshapes its balance sheet. The average debt maturity lengthens to over 8 years, easing repayment pressures.
2. Cost Efficiency: Replacing high-interest debt (e.g., 9% notes) with lower-cost facilities (e.g., SOFR +4.25% for Bausch + Lomb's term loans) cuts interest costs by ~15–20%, boosting free cash flow.
3. Operational Agility: The non-guarantor subsidiary structure (1261229 B.C. Ltd.) isolates Bausch + Lomb's equity stake (52.5% pledged as collateral) from parent company risks, preserving its credit profile for future deals.

Investors should monitor BHCC's stock for signs of stabilization post-refinancing.

Risks and Considerations

While the restructuring is a win for debt sustainability, risks remain:
- Interest Rate Exposure: Bausch + Lomb's floating-rate notes (EURIBOR-based) and SOFR-linked loans could rise if central banks hike rates further.
- Operational Execution: Lower debt costs mean little if Bausch + Lomb fails to grow its core business (e.g., contact lenses, surgical products).
- Collateral Constraints: The pledged 52.5% equity stake in Bausch + Lomb limits the parent's ability to leverage the subsidiary for future financing.

Investment Thesis: A Buy-and-Hold Opportunity?

For investors, Bausch Health's refinancing reduces default risk and stabilizes the stock, making it a candidate for conservative portfolios. Key takeaways:
1. Near-Term Safety: The 2032 notes and extended maturities eliminate near-term liquidity crises, a major positive for bondholders and equity holders alike.
2. Growth Catalysts: Freed-up cash flow could fund R&D in emerging markets or acquisitions in the $100B+ global eye care industry.
3. Valuation: At current prices, BHCC trades at 5.2x EV/EBITDA—a discount to peers like Cooper Companies (COO) at 10.5x—suggesting undervaluation if operational improvements materialize.

A drop from 6.5x to ~4.0x post-2025 refinancing signals improved credit metrics.

Final Call: Hold for Stability, Wait for Catalysts

Bausch + Lomb's refinancing is a well-executed move to reset its financial trajectory. Investors seeking stability in a volatile market can hold the stock, but aggressive buyers should wait for clearer signs of top-line growth. Monitor EBITDA recovery and any M&A activity in 2026 to confirm the strategy's success.

In the end, this restructuring isn't just about debt—it's about buying time to win the long game in eye care.