Bausch Health Announces Filing of Supplement to Proxy Statement

Rhea-AI Summary

Bausch Health (NYSE:BHC) has filed a supplement to its April 2, 2025 proxy statement, revealing that Carl Icahn and affiliates have acquired cash-settled equity swaps for approximately 90.7 million common shares (24.6%), in addition to their 34.7 million beneficially owned shares (9.4%). This brings Icahn's total economic interest to approximately 34% of outstanding shares.

The company's Board directed a review of Icahn's swap positions and John Paulson's bond holdings. Icahn's swaps were accumulated between May 2021 and September 2023, with a February 2028 maturity date. Paulson, the Board Chairman, holds $50 million in Bausch Health bonds and plans to dispose of these securities to avoid potential conflicts of interest.

In response, Bausch Health implemented a shareholder rights plan (SRP) on April 14, 2025, designed to prevent any entity from acquiring 20% or more of outstanding shares without complying with permitted exemptions.

Positive

• Implementation of shareholder rights plan (SRP) to protect against creeping takeovers
• Board Chairman Paulson's commitment to dispose of bond holdings to eliminate potential conflicts

Negative

• Significant concentration of ownership with Icahn controlling 34% economic interest
• Icahn's refusal to provide copies of swap agreements during review
• Potential risk of creeping takeover attempt

Insights

Corporate Governance Expert

Icahn's previously undisclosed 34% economic interest triggers poison pill; Chairman's bond holdings create governance complexity requiring divestment.

Bausch Health's proxy statement supplement reveals Carl Icahn controls a 34% economic interest in the company - far larger than his previously reported 9.4% direct ownership. This position consists of 34,721,118 directly owned shares plus cash-settled equity swaps covering 90,720,000 additional shares, accumulated between May 2021 and September 2023.

The company's defensive response is significant: a shareholder rights plan (poison pill) adopted on April 14 that prevents any entity from acquiring 20% or more beneficial ownership without board approval. This effectively caps Icahn's ability to convert his economic interest into voting control through direct share acquisition.

Equally noteworthy is the disclosure that Board Chairman John Paulson holds $50 million in Bausch Health bonds purchased before rejoining the board. This creates a potential conflict of interest since bondholders and shareholders may have divergent interests regarding capital allocation and risk tolerance. Paulson's announced intention to divest these holdings when the trading window opens demonstrates recognition of this structural conflict.

The board's engagement of Sidley Austin as independent counsel to investigate both issues reflects proper governance protocol, though Icahn's refusal to provide copies of swap agreements suggests ongoing tension. These revelations fundamentally alter the governance landscape at Bausch Health, creating a complex dynamic between management, a major activist investor with substantial economic interest, and a Chairman working to eliminate potential conflicts.

Financial Analyst

Icahn's massive 34% economic stake via direct shares and swaps reveals significant activist positioning; poison pill limits his control options.

The disclosure that Carl Icahn controls a 34% economic interest in Bausch Health represents a material revelation for investors. His position structure is particularly noteworthy: only 9.4% through direct ownership of 34,721,118 shares, with the remaining 24.6% via cash-settled equity swaps referencing 90,720,000 shares.

This structured approach provided Icahn significant economic exposure while potentially avoiding beneficial ownership reporting requirements that would apply to direct share purchases. The swaps' single maturity date of February 28, 2028, indicates a long-term position rather than short-term speculation.

The company's shareholder rights plan implementation creates a strategic roadblock, preventing Icahn from converting his economic interest into greater voting control without board approval. This effectively forces any control effort to become a formal negotiation with the board or a proxy contest rather than a creeping accumulation of shares.

Meanwhile, Chairman Paulson's $50 million bond position creates a unique situation where the board leader has both equity and debt interests in the company. His decision to divest the bonds eliminates potential conflicts regarding capital allocation and debt management decisions. The bonds were purchased before his board role and with appropriate approvals, reducing governance concerns.

These developments reveal significant behind-the-scenes positioning by major financial players in Bausch Health's capital structure, with implications for corporate strategy and governance direction as the May 13 annual meeting approaches.

Supplement In Response to Company Learning that Carl Icahn and Affiliates Have Cash-Settled Equity Swaps for Approximately 90 Million of Its Common Shares

LAVAL, QC / ACCESS Newswire / April 22, 2025 / Bausch Health Companies Inc. (NYSE:BHC)(TSX: BHC) (the "Company" or "Bausch Health") today announced that it has filed a supplement (the "Proxy Statement Supplement") to its proxy statement dated April 2, 2025 (the "Proxy Statement") in respect of the Company's upcoming annual general meeting of shareholders on May 13, 2025. The Company is updating the Proxy Statement to disclose, in addition to the 34,721,118 common shares reported as being beneficially owned (9.4%), Mr. Carl C. Icahn and his affiliates (collectively, "Icahn") had entered into cash-settled equity swap agreements covering 90,720,000 of the Company's common shares (24.6%), with a single maturity date of February 28, 2028. Taken together Icahn now has an economic interest covering approximately 34% of the Company's outstanding common shares.

On March 12, 2025, the Board of Directors of the Company (the "Board") adopted a resolution directing the Company's General Counsel to review the Icahn's position in equity swaps and certain bonds held by John Paulson, the Chairman of the Board. The General Counsel hired Sidley Austin, LLP ("Sidley"), as independent counsel, to conduct such review. Sidley presented its findings to the Board on April 9, 2025. As part of its review, Sidley sought information regarding Icahn's swap positions and requested copies of the swap agreements themselves. Icahn refused to provide the copies of the swap agreements, but Icahn informed Sidley that (i) their additional long economic exposure to 90.72 million Company shares through equity swaps was accumulated over more than one hundred trades, executed between May 26, 2021 and September 8, 2023; (ii) the agreements provide for early termination via cash settlement; (iii) the agreements do not confer voting or dispositive power over the referenced shares; and (iv) the agreements do not "allow for" physical settlement.

Regarding Mr. Paulson's bond position, (i) Mr. Paulson purchased an aggregate of $50 million Bausch Health bonds prior to rejoining the Board of Bausch Health; (ii) he purchased the bonds in the open market; and (iii) he obtained pre-approval for the bond purchase from the General Counsel of Bausch + Lomb, where he was a Board member. Based on the available facts and the review conducted by Sidley, the Company determined that Mr. Paulson's bond purchase was not required to be disclosed under Item 404 of Regulation S-K as a related party transaction. Nevertheless, Mr. Paulson has requested that the Company update the Proxy Statement to reflect his bond position and informed the Company that he intends to dispose of his debt securities when the Company's trading window is open in order to eliminate even the appearance of a conflict of interest and to demonstrate that his interests have always been fully aligned with those of all the Company's shareholders.

Finally, as previously announced on April 14, 2025, the Company adopted a shareholder rights plan agreement (the "SRP"). The SRP is intended to prevent a person or group from acquiring beneficial ownership of 20% or more of the Company's outstanding common shares (including by way of a "creeping" take-over bid) without complying with the permitted exemptions under the plan. The SRP protects against such "creeping" take-over bids that may serve to benefit certain shareholders to the detriment of others. The SRP provides the Board with an opportunity to identify, solicit, develop and negotiate value-enhancing alternatives that benefit all shareholders. Bausch Health is confident that the SRP is in the best interests of the Company and its shareholders.

Except as expressly provided in the Proxy Statement Supplement, the Proxy Statement remains unchanged from the version that was previously filed on SEDAR+ and EDGAR. The Proxy Statement Supplement is available under the Company's profile on the SEDAR+ website at www.sedarplus.ca and the EDGAR website at www.sec.gov/edgar.

About Bausch Health
Bausch Health Companies Inc. (NYSE:BHC)(TSX:BHC) is a global, diversified pharmaceutical company enriching lives through our relentless drive to deliver better health care outcomes. We develop, manufacture and market a range of products primarily in gastroenterology, hepatology, neurology, dermatology, dentistry, aesthetics, international pharmaceuticals, and eye health, through our controlling interest in Bausch + Lomb Corporation. Our ambition is to be a globally integrated healthcare company, trusted and valued by patients, HCPs, employees, and investors.

Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of applicable securities laws, including the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may generally be identified by the use of the words "will," "anticipates," "hopes," "expects," "intends," "plans," "should," "could," "would," "may," "believes," "subject to" and variations or similar expressions. Forward-looking statements, by their nature, are based on assumptions and are subject to known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the forward-looking statement will not occur. The forward-looking statements in this press release speak only as of the date hereof and reflect several material factors, expectations and assumptions. Undue reliance should not be placed on any predictions or forward-looking statements as these may be affected by, among other things, changing external events and general uncertainties of the business. Actual results are subject to other risks and uncertainties that relate more broadly to Bausch Health's overall business, including those more fully described in Bausch Health's most recent annual and quarterly reports and detailed from time to time in Bausch Health's other filings with the SEC and the Canadian Securities Administrators, which factors are incorporated herein by reference. The Company undertakes no obligation to update any of these forward-looking statements to reflect events, information, or circumstances after the date of this press release or to reflect actual outcomes, unless required by law.

Investor Contact:
Garen Sarafian
ir@bauschhealth.com
(877) 281-6642 (toll free)

Media Contact:
Katie Savastano
corporate.communications@bauschhealth.com
(908) 541-3785

SOURCE: Bausch Health Companies Inc.

View the original press release on ACCESS Newswire

FAQ

What is Carl Icahn's total stake in Bausch Health (BHC) as of April 2025?

Carl Icahn holds a 34% total economic interest in BHC, consisting of 9.4% (34.7M shares) beneficial ownership and 24.6% (90.7M shares) in cash-settled equity swaps.

When will Bausch Health's (BHC) annual general meeting take place?

Bausch Health's annual general meeting of shareholders is scheduled for May 13, 2025.

What is the maturity date of Icahn's equity swap agreements with BHC?

Icahn's cash-settled equity swap agreements have a single maturity date of February 28, 2028.

How much Bausch Health (BHC) bonds does John Paulson own?

John Paulson owns $50 million in Bausch Health bonds, purchased in the open market before rejoining the Board.

What is the threshold for Bausch Health's (BHC) new shareholder rights plan?

The shareholder rights plan prevents any person or group from acquiring 20% or more of BHC's outstanding common shares without complying with permitted exemptions.