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Goldman Sells Valeant Shares Used as Collateral by CEO

Valeant Pharmaceuticals shares are under pressure.
ENLARGE

Valeant Pharmaceuticals shares are under pressure.


Photo:

Ryan Remiorz/Associated Press

By

Chelsey Dulaney

Updated Nov. 6, 2015 8:30 a.m. ET

Valeant Pharmaceuticals International Inc.
VRX


-14.36
%




said Goldman Sachs Group Inc.
GS


0.19
%




sold on Thursday 1.3 million shares that had been used as collateral for loans extended to its embattled chief executive, Michael Pearson.

Mr. Pearson had pledged the shares as collateral for $100 million in loans for charitable donations to Duke University, funding a community swimming pool, and meeting taxes obligations related to Valeant’s equity awards, among other items.

Goldman required repayment of the loans, and sold the shares on Thursday to meet the obligations.

Mr. Pearson said in a news release that “it was not my desire that shares be sold now.”

Such forced selling, typically called a margin call, can be one of the fuels for a downward slide in share price. As the stock loses value, those who borrowed against it sometimes have to sell, sending the price even lower.

Mr. Pearson, meanwhile, affirmed his commitment to his company.

“I have complete confidence in Valeant’s ability to move forward and continue meeting our commitments to patients, doctors, and shareholders,” he said.

Valeant said the shares sold by Goldman accounted for 20% of the shares Mr. Pearson owned as of April. Mr. Pearson doesn’t receive a base salary and is instead compensated through performance-based cash and stock incentives.

Questions are swirling about the future of Mr. Pearson, sparked by comments from one of Valeant’s largest shareholders, hedge-fund billionaire William Ackman, who had expressed doubts in a page-one article Thursday in The Wall Street Journal about whether the CEO had the skills needed to manage the political and public-relations challenges around the company.


ENLARGE



Valeant’s stock has been pummeled in recent weeks after a short-selling research firm raised questions about the company’s business practices, in particular relationships with specialty pharmacies that distribute its drugs.

Valeant’s U.S.-listed shares have lost 53% of their value in the past month through Thursday’s close.

Write to Chelsey Dulaney at [email protected]

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Goldman Sells Valeant Shares Used as Collateral by CEO Reviewed by on . ENLARGE Valeant Pharmaceuticals shares are under pressure. Photo: Ryan Remiorz/Associated Press By Chelsey Dulaney Chelsey Dulaney The Wall Street Journal CANCE ENLARGE Valeant Pharmaceuticals shares are under pressure. Photo: Ryan Remiorz/Associated Press By Chelsey Dulaney Chelsey Dulaney The Wall Street Journal CANCE Rating:
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