One of Valeant’s creditors just gave it the worst possible news

Reuters

One of Valeant Pharmaceuticals’ creditors has told the company that it will call a default on the company, Dow Jones reports.

Earlier this month, Valeant announced that it had secured agreement to avoid default and refinance $11 billion in secured loans from 50% of those creditors.

The company risked default because it had failed to file its annual report by March 15, and a failure to file it before April 29 would have triggered a technical default on those loans.

Now that it has been called, Valeant will have a 60-day window during which it must file its annual report or pay its bonds back early.

Here’s the company’s statement on the default notice (emphasis added):

Valeant Pharmaceuticals… today announced that it has received a notice of default from holders of its 5.5% Notes due 2023 as a result of the delay in the Company filing its Form 10-K for the fiscal year ended December 31, 2015.

The Company discussed on its March 15, 2016 preliminary earnings call the possibility of receipt of such notice. Under its bond indentures, the Company has until June 11, 2016, 60 days from the receipt of the notice, to file its 10-K, which will cure the default in all respects.

The Company is working diligently and is on schedule to file its 10-K on or before April 29, 2016. The notice of default does not result in the acceleration of any of the Company’s indebtedness.

Valeant also maintains that it will be able to file its annual report by April 29.

According to The Wall Street Journal,Centerbridge owns about $250 million face value of the $1 billion 2023 note issue, and holders of 25% of any single Valeant issue can call a default under certain circumstances, including the failure to file.

Valeant’s stock is down around 6% in after-market trading.

Debt is just one of the issues plaguing the company, whose stock has fallen over 80% since October. That’s when allegations of malfeasance from a short seller combined with government scrutiny over Valeant’s pricing practices turned the former Wall Street darling stock into a corporate disaster.

Outgoing CEO Michael Pearson will testify about Valeant’s business practices before the US Senate Special Committee on Aging on April 27. On Wednesday, that same committee will hold a business meeting to decide whether or not to initiate contempt proceedings against Pearson for his failure to take a deposition earlier this month.

On Tuesday, US House Representative Elijah Cummings (D-Maryland) also accused Valeant of failing to cooperate with Congress, saying that documents he requested from the company have yet to materialize.