- Valeant Pharmaceuticals on Wednesday said it had asked its lenders to extend a deadline for filing documents with the SEC, in order to avoid a breach of contract and possible default. An ongoing investigation into its accounting practices has delayed the submission of its annual 10-K report, originally due on March 15.
- The company still expects to file on or before April 29, the last possible day it could file to resolve a credit default, but is now asking for an extension until May 31.
- Any such extension would require the approval of lenders holding more than 50% of the company's loans in principal amount. It would also restrict Valeant's ability to make acquisitions and pay dividends until it files the reports.
Valeant previously said if it did not file by March 30, there would be a default under the credit facility. However, the company has a 30-day "curing" period in which it can resolve the default by filing its 10-K, taking the company to its April 29 target.
In its update on Wednesday, the company indicated the extension on its 10-K deadline (along with another deadline on a quarterly report) would give it relief if it is unable to meet the April 29 deadline as it has previously pledged.
All of this is tied to the ongoing investigation by an ad hoc committee of the board of directors into accounting tied to Valeant's severed relationship with the specialty pharmacy Philidor. The company has accused its former CFO and current board member Howard Schiller of improper conduct but Schiller has refused to step down from his post.
In February, Valeant disclosed preliminary findings of the investigation which showed approximately $58 million in revenue should not have recognized in its 2014 year-end earnings report. In essence, Valeant redundantly counted revenue when it consolidated Philidor into its books.
The investigation is "now nearer to completion," but not yet concluded. No new mis-statements have been identified since February.