Bausch + Lomb completes credit agreement amendment, reducing interest cost on $2.8bn debt

Bausch + Lomb Corporation (NYSE/TSX: BLCO) has completed a refinancing of approximately $2.8 billion in outstanding Term B loans, replacing previously scheduled maturities in 2028 and 2031 with a single new facility that matures in January 2031. The company also successfully secured lower borrowing costs and delayed principal repayments until mid-2026. This credit restructuring sharpens the eye-care company’s long-term financial positioning under the leadership of President and Chief Executive Officer Brent Saunders and signals a proactive approach to capital allocation, liquidity management, and strategic optionality across global markets.

The refinancing transaction, formalized via a fourth amendment to Bausch + Lomb Corporation’s existing credit agreement, reflects a deliberate capital structure move aimed at freeing up near-term cash flows, supporting operational reinvestment, and aligning loan maturities with longer-term strategic ambitions.

Why did Bausch + Lomb restructure its debt into a single $2.8 billion tranche maturing in 2031?

The restructuring replaces two existing tranches of Term B loans—one due in 2028 and another due in 2031—with a consolidated new tranche that matures on January 15, 2031. The newly issued loans carry an annual amortization rate of 1.00 percent, with the first principal installment deferred until June 30, 2026. This structure creates an operational runway of over 18 months before the company must begin scheduled principal repayments.

Crucially, the refinancing also reduced Bausch + Lomb Corporation’s borrowing costs. For loans based on the Secured Overnight Financing Rate (SOFR), the new margin is set at 3.75 percent per annum. For alternate base rate loans, the margin is 2.75 percent per annum. These represent margin step-downs of 50 basis points and 25 basis points respectively when compared to the previous term loans. A credit spread adjustment of 0.10 percent will apply to all SOFR-based loans.

The maturity extension and margin reduction reflect both improved market conditions and lender confidence in Bausch + Lomb Corporation’s credit profile. This move also consolidates the company’s repayment schedule into a cleaner, more predictable structure, which may be favorable for future bond issuance or structured financing options.

How does the refinancing impact Bausch + Lomb’s liquidity and cash flow priorities through 2026?

Deferring amortization until the second half of 2026 gives Bausch + Lomb Corporation increased breathing room to direct cash flow toward growth initiatives rather than near-term debt service. This flexibility comes at a strategically important time. The company continues to pursue product launches and market expansion across its vision care, pharmaceutical, and surgical device segments.

The absence of immediate amortization also means that capital expenditures, research and development spending, and working capital needs can be prioritized without the competing pressure of short-term loan repayments. Given the intensifying competition in the global eye health market, this liquidity profile allows Bausch + Lomb Corporation to remain agile in both offensive and defensive capital deployment strategies.

Moreover, by locking in interest rates at a reduced margin now, the company hedges against future upward shifts in base rates or credit spreads. Although the SOFR-based rate is floating, the current margin structure reflects a favorable negotiation window that may not remain open if broader macroeconomic tightening resumes.

What does this say about Bausch + Lomb’s strategic intent under CEO Brent Saunders?

Brent Saunders’ return to Bausch + Lomb Corporation as Chief Executive Officer was widely interpreted as a sign that the company would aggressively pursue both organic and inorganic growth while tightening capital structure efficiency. The completed refinancing supports this thesis by aligning capital structure with strategic flexibility.

In particular, the new term structure supports potential acquisition activity, new product platforms, or geographic market entries without placing strain on operating cash. This could be especially important if the company seeks to scale its surgical franchise or expand in emerging markets where local operating margins are tighter and upfront investment is required.

Additionally, having a longer-dated, unified debt maturity could strengthen the company’s negotiating position if it pursues bolt-on acquisitions in the next two years. From a capital markets perspective, this new loan structure may be interpreted as a forward-looking move that places Bausch + Lomb Corporation in a stronger position relative to peers with more complex or staggered debt profiles.

How does this shift compare to how competitors are managing capital structure in 2026?

The global eye care industry has seen rising strategic interest from large-cap healthcare players, particularly in areas such as digital diagnostics, surgical robotics, and next-generation therapeutic delivery. Against this backdrop, companies like Alcon, CooperCompanies, and Johnson & Johnson Vision have emphasized long-term balance sheet flexibility.

By consolidating and extending its loan maturity profile, Bausch + Lomb Corporation moves closer to industry standards on leverage structure while enhancing its strategic flexibility. Analysts monitoring debt-adjusted EBITDA multiples and return on invested capital metrics may interpret this refinancing as a preparatory step toward bolder expansion moves or capital reallocation events.

The refinancing also gives Bausch + Lomb Corporation an edge in controlling execution risk. In capital-intensive sectors like medical devices and pharmaceuticals, debt repayment pressure can interfere with long-cycle innovation timelines. The company’s updated credit profile, now more evenly spread out to 2031, helps mitigate that friction.

What are the investor and institutional sentiment signals from this refinancing?

Investor reaction to the refinancing has so far been measured, with limited share price movement in the immediate aftermath. That response may reflect a consensus view that the refinancing was expected or strategically neutral in the short term. However, the transaction could have deeper implications for institutional sentiment in the quarters ahead.

From a credit perspective, the move signals improved lender trust and better capital market access. It also reinforces the company’s narrative of post-restructuring discipline following its separation from Bausch Health Companies. Equity analysts may see this as a clean-up step ahead of future earnings or product announcements, especially as the company has refrained from tying this debt maneuver to any specific acquisition or return-of-capital plan.

The absence of equity issuance alongside the refinancing also strengthens the company’s position with long-term shareholders by avoiding dilution while unlocking capital efficiency. The key question now is whether this refinancing becomes a prelude to broader capital allocation decisions, especially in a year where macro headwinds and inflation-linked cost structures remain volatile across healthcare manufacturing and distribution.

What are the key takeaways from Bausch + Lomb’s $2.8 billion debt refinancing and maturity extension?

• Bausch + Lomb Corporation has refinanced approximately $2.8 billion in Term B loans, replacing 2028 and 2031 maturities with a new tranche maturing in January 2031.

• The new loan structure reduces interest rate margins by 25 to 50 basis points, depending on the base rate, and includes a 0.10 percent credit spread adjustment for SOFR-based loans.

• Scheduled principal repayments are deferred until June 30, 2026, allowing the company to prioritize operational liquidity and reinvestment.

• This restructuring improves balance sheet clarity and aligns with Brent Saunders’ strategy to increase financial flexibility for product development and potential M&A.

• Compared to sector peers, the maturity extension and margin reduction bring Bausch + Lomb Corporation’s capital structure closer to large-cap medtech norms.

• The transaction was executed without any equity issuance or concurrent corporate action, signaling internal confidence in free cash flow sustainability.

• Investor sentiment remains stable, with the refinancing seen as a prudent capital optimization rather than a signal of distress or acquisition urgency.

• The long-dated maturity profile could serve as a platform for strategic acceleration in eye health innovation, particularly across surgical and pharma product lines.