Valeant Pharmaceuticals signage is displayed on a monitor on the floor of the New York Stock Exchange before the opening bell on March 21, 2016.
Photograph by Michael Nagle—Bloomberg via Getty Images
By Reuters
March 30, 2016

Valeant Pharmaceuticals (vrx) said it had asked its lenders to agree to waive a condition of its credit facility that would put it in breach of covenants if the company did not file its annual report by April 29, as planned.

The company, whose U.S.-listed shares were up about 4.1% in morning trading on Wednesday, said this month that a delay in filing its annual report would put it at risk of a default on its $30 billion debt.

Valeant said last week that a board committee probing the company’s ties to specialty drug distributor Philidor Rx had found accounting problems dating back to December 2014.

The Canadian drugmaker said on Wednesday that the committee had not found any additional items affecting its financial statements but had not finished its review.

Valeant said it was seeking approval from lenders to extend the deadline for filing its annual report to May 31, although it said it still intended to file by April 29.

“The company is comfortable with its current liquidity position and cash flow generation for the rest of the year, and remains well positioned to meet its obligations,” Valeant said.

 

The proposed waiver must be approved by lenders holding more than 50% of the company’s loans in principal amount.

Valeant said the amendment to its credit agreement would restrict its ability to make certain acquisitions, pay dividends and other payments until its financial statements are filed.

The company would also be required to apply substantially all of its net asset sale proceeds to prepay its term loans.

Laval, Quebec-based Valeant has lost nearly 90% of its value since August after coming under public scrutiny for its pricing and distribution practices.

The company is also under investigation by the U.S. Congress and various U.S. government agencies over to its strategy of sharply increasing drug prices as well as its links to Philidor.

Valeant said last week that CEO Michael Pearson would step down after a successor was found. The company also added activist investor William Ackman, whose Pershing Square Capital Management holds 9% of Valeant, to its board.

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