The clock is still ticking on Valeant's ($VRX) overdue regulatory financial filings. But now, the company has more time to get its house in order before its creditors come calling.
The Canadian drugmaker's loan holders have agreed to alter the terms of its debt, extending the deadline for its Securities and Exchange Commission filings and loosening some of the financial conditions on the loans, sources told The Wall Street Journal. Lenders holding more than half its debt signed on to a proposal Valeant laid out last week, granting the company the green light Wednesday.
Of course, the creditors' concessions didn't come for free, the newspaper notes. Valeant agreed to shell out a $50,000 fee per $10 million of loans and boost interest rates on the debt by 1%--though that rate could return to normal if the company hits certain financial targets.
Still, it's a good sign for Valeant, whose investors fled for the doors last month as it appeared to be staring down bankruptcy. In the days that followed, rumors swirled that the company's lenders were planning to use their leverage to extract new terms from the embattled drugmaker.
And according to Valeant's directors, it's on track to file its overdue 10-K by April 29--well ahead of its new deadline. As the company announced Tuesday, its ad hoc committee--assembled in October to investigate a short seller's claims that the company used its Philidor specialty pharmacy relationship to inflate its top line--announced it had wrapped up its probe and would be passing all oversight duties--along with its "assessment of related internal controls and remediation matters"--to the board.
Bill Ackman
That's not to say all is well and good at the drugmaker. Valeant also this week told employees in a memo that it would cut 280 sales jobs in women's health, gastrointestinal and dermatology drugs. The company is still on the hunt for a successor to CEO J. Michael Pearson, who got the boot after the debt debacle triggered a one-day share-price drop of 51%--but brand new board member Bill Ackman now says finding a replacement skipper is "a matter of weeks and not months," according to media reports.
And then there's the congressional ire Valeant has sparked in recent months with its price-hike strategy--and its commitment to staying mum amid a flurry of pointed questions from lawmakers about its business model. Recently, the Senate Special Committee on Aging revealed that it expected Pearson to testify as a witness at an upcoming hearing--its third on the issue of "sudden, aggressive price spikes of decades-old" prescription drugs.
- see The Wall Street Journal's take (sub. req.)
Special Report: The most influential people in biopharma today - J. Michael Pearson - Valeant
Related Articles:
Valeant wraps accounting review, promises to file 10-K by April 29
Valeant moves quickly to slash jobs, beginning with Addyi, dermatology sales reps
Valeant pitches deadline delays to creditors in debt rescue plan
Valeant heeds calls for new CEO, links iffy financials to hard-charging 'tone at the top'
Valeant chief to employees: Don't worry. We're not going bankrupt
Creditors may put the screws to Valeant as default risk looms: Reuters
Valeant investors, shocked by lightweight guidance, aren't buying CEO Pearson's recovery plans
Another snafu for Valeant as internal probe triggers restated earnings