Lenders give Valeant a reprieve, agree to extend deadline for filing annual report
- Valeant Pharmaceuticals' lenders agreed to give the embattled drugmaker an extra month to file its annual report with the Securities and Exchange Commission, the company said on Thursday. The report, originally due in March, has been delayed by a recently concluded internal investigation into the company's accounting practices.
- The extension gives Valeant a reprieve from the threat of a default on its credit facility, which would have been triggered if the company failed to file the report by April 29. The deadline is now extended to May 31.
- More than 50% of principal loan holders agreed to the new terms in return for fees and a 1 percentage point higher interest rate on the debt, as reported by the Wall Street Journal.
Although Valeant had pledged to file its Form 10-K with the SEC on or before April 29, thereby avoiding a default, the extension and new terms will give the company greater flexibility. It will also greatly diminish the threat of default, providing more certainty for the company's investors who have seen the stock plummet in value.
Under the new terms, Valeant must file its 10-K by May 31 and its Q1 report by July 31. The extension also modifies a debt ratio governing how much earnings the company must retain to pay interest on its debt.
However, the extension didn't come without costs. According to the Wall Street Journal, Valeant agreed to pay $50,000 per $10 million of loans, as well as pay a 1 percentage point higher interest rate on its debt.
Earlier this week, the company announced a special investigatory committee had concluded its internal investigation into Valeant's accounting practices without finding any further misstatements. Back in February, the panel identified approximately $58 million in revenue which should not have been recognized on a 2014 earnings report. The possibility the investigation might find further errors had been hanging over the company, hindering its ability to pivot away from the Philidor scandal and troubles of the past several months.
With an extension in hand and the investigation wrapped up, Valeant will be better able to focus on rebuilding as it works to find a successor to CEO Michael Pearson, who will step down as soon as a replacement is named.
Note: A previous version of this article said Valeant's new deadline for filing its 10-K was March 31. The correct date is May 31.
- Wall Street Journal Valeant Lenders Agree to Amend Terms of Debt
- Reuters Valeant gets extra month from lenders to file annual report
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