Valeant Pharmaceuticals resolved its default on some of its $30 billion in debt by finally filing its long-overdue U.S. financial report for 2015 on Friday. The badly tarnished Canadian drugmaker also announced a slate of mostly new nominees for elections to its board in June.
The moves briefly nudged up Valeant’s battered shares, but they quickly headed south amid a broader market sell-off and the realization that the former Wall Street darling’s future is still in question.
The report didn’t reveal major new issues with Valeant’s “unethical” accounting practices, but the new board and executives will face so many problems that investors would be better off putting money into major drugmakers or other health care sectors, said Les Funtleyder, health care portfolio manager at E Squared Asset Management.
“They’re being investigated by everybody under the sun,” Funtleyder said. “That’s going to distract the company for a year at least. That’s assuming they don’t find anything.”
Agreements with its note and bondholders required Valeant to file its annual financial report with the U.S. Securities and Exchange Commission in March. When it didn’t, some debt holders declared Valeant in default and wrung higher interest rates out of the company. Further delay could have led debt holders to demand faster debt repayment.
Preventing that was crucial, but amounts to successfully knocking out one mole in a months-long whack-a-mole game with no end in sight.
