Drugmaker Valeant’s Bondholders Intend To Call Default

Valeant Pharmaceuticals International Inc. said on Tuesday that it received a notice of default from its bondholders as a result of a delay filing its annual report.

Centerbridge Partners LP issued the notice, but it is not expected to lead to a default, according to people familiar with the matter.

Centerbridge declined to comment.

Valeant said in a statement that it now has until June 11 to make the filing, under its bond agreements, but reiterated its intention to file it on or before April 29.

The company also said the notice of default does not mean it must pay back the bonds faster.

Valeant's bonds were unchanged to half a point lower in late trading on Tuesday, according to IFR.

The Quebec-based drugmaker last week said its lenders had given it an extra month to file the annual report, providing breathing room for the embattled company as it tries to win back investor confidence.

Valeant has faced intense scrutiny and U.S. congressional investigations over its steep price increases for older medicines as well as for other questionable business and accounting practices. Its share price has slid almost 90 percent since last August.

On Monday, the company asked its outgoing chief executive, Michael Pearson, to cooperate with the U.S. Senate Committee on Aging after he failed to show up at a hearing on Friday.

The Senate committee said it may start contempt proceedings against Pearson after he failed to respond to a subpoena to appear for a deposition related to an investigation into drug pricing.

Pearson was unable to testify at a congressional hearing in February because he was on medical leave recovering from pneumonia.

Valeant was represented by interim CEO Howard Schiller, whom the company has since accused of "improper conduct" that contributed to a misstatement of the company's financial statements. Schiller has denied any wrongdoing.

Prosecutors in Massachusetts and Manhattan are probing Valeant's pricing and distribution channels, while the U.S. Securities and Exchange Commission is investigating its accounting and disclosure issues.

Valeant shares were down 0.7 percent in after-hours trading in New York. They had earlier closed up 2.0 percent at $31.99.