Valeant chief to employees: Don't worry. We're not going bankrupt

Shareholders may have panicked this week over the prospect that Valeant could default on its debt. But the company is telling its employees not to worry.

Valeant CEO J. Michael Pearson

Valeant ($VRX) isn't going bankrupt, CEO J. Michael Pearson reassured staff of the Canadian drugmaker in a memo seen by Bloomberg. "This is a matter we are taking very seriously," he wrote. "We are working to extend the deadlines in our loan agreements, and I am confident we will be able to do so."

Valeant's ability to hold up its end of its loan bargains--struck back when the company sought buyout after buyout to fuel growth--came into question earlier this week, when it admitted it wouldn't hit a March 30 cutoff to file its audited annual financial reports. It has $58 million in accounting missteps related to specialty pharmacy Philidor to thank for the delay; those discrepancies triggered an ongoing earnings restatement, the company said last month.

And while Pearson may feel confident about the situation, investors haven't shared the same sentiment. That announcement--along with news that several of the company's businesses were underperforming--sent them fleeing for the doors, with Valeant's share price tanking by more than 50%.

Meanwhile, bagging those extensions may not be so easy. Creditors--who can demand accelerated repayment after March 30--may attempt to negotiate key elements of their pacts with the Quebec-based drugmaker, potentially raising the cost of its debt, Reuters reported Thursday.

Valeant has enough on its plate without a squeeze from its creditors. In addition to the earnings restatement, sales woes and share-price massacre, it's dealing with channel-stuffing allegations, a price-hike controversy, and investigations from bodies including the SEC and Congress.

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