Ackman Promises More Active Role in Valeant Management

Mar 15 2016 | 6:23pm ET

Shares of Valeant Pharmaceuticals (VRX) crumbled more than 51% on Tuesday, raising the stakes again for activist hedge fund manager Bill Ackman. According to estimates from recent regulatory filings, Ackman lost more than $1 billion in share value in a day.
Ackman's Pershing Square Capital owns 30,711,122 Valeant shares. The company reported weaker-than-expected quarterly earnings, slashed its 2016 guidance, and issued a warning about a possible default. The company’s share price is off $230 from its 52-week high as investors continue to flee. Ackman, however, remained resilient in a letter on Tuesday.
"We continue to believe that the value of the underlying business franchises that comprise Valeant are worth multiples of the current market price," Ackman wrote.
"Getting to those values, however, will require restoration of shareholder confidence in the management and governance of the company."
Ackman added that his firm plans to be far more engaged in the company’s day-to-day management.
"We are going to take a much more proactive role at the company to protect and maximize the value of our investment," he said.
Valeant has required significant amounts of debt in order to finance its aggressive acquisition strategy over recent years. However, any default on debt could reduce the company’s ability to borrow more and would likely push lenders to require faster repayment. 
Company CEO Michael Pearson told Reuters that he was "comfortable" with the company’s current financial situation and said that he anticipates that the firm will be able to meet its financial obligations.
"Our business is not operating on all cylinders, but we are committed to getting it back on track," Pearson said.

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