Valeant may be on the verge of a technical default as its lender demand not one but two pounds of flesh, it may be suffering imploding sales, it may have fired the entire salesforce for the female libido drug Addyi (which it acquired late last year), and it may be trying to pin all of its allegedly criminal book-cooking on its former CFO (who used to be a fromer head Goldman banker), the same CFO who refuses to resign from Valeant’s board even though Valeant clearly wants him gone, but at least minutes ago, an ad hoc committee from Valeant’s board (yes the same board where the former scapegoated CFO is still present) has decided that upon reviewing its company, it has found nothing else that was glaringly criminal, and will therefore no restate results any further, and intends to file a 10K on or before April 29, 2016.
From the release:
Valeant Pharmaceuticals International, Inc. (NYSE: VRX and TSX: VRX) today announced that the ad hoc committee of the board of directors (the “Ad Hoc Committee”) believes that its review of various Philidor and related accounting matters is complete, and that it has not identified any additional items that would require restatements beyond those required by matters previously disclosed.
Given the completion of the review, Valeant’s Board has determined to dissolve the Ad Hoc Committee and that the 12 independent directors on Valeant’s Board, including the members of the Board’s Audit and Risk Committee, will assume oversight responsibility for remaining work associated with the completion of the Company’s current and restated financial statements and disclosures, as well as its assessment of related internal controls and remediation matters. As previously disclosed, the company intends to file its Form 10-K on or before April 29, 2016.
Robert Ingram, chairman of the board and chair of the Ad Hoc Committee stated, “We appreciate the efforts of the Ad Hoc Committee and its independent advisors over the past five months. After conducting more than 70 interviews and reviewing over one million documents, the Ad Hoc Committee has not identified any additional items requiring restatements beyond those matters previously disclosed. We believe it is appropriate to transfer responsibility for any continuing work to the Board’s independent directors. We continue to work diligently and are on schedule to file our Form 10-K on or before April 29, 2016.”
The company is in the process of restating the affected financial statements and the restated financial statements will be included in the company’s Form 10-K for the year ended December 31, 2015, which the company intends to file with the Securities and Exchange Commission and the Canadian Securities Regulators on or before April 29, 2016. The company believes that after giving effect to the restatement, it will have remained in compliance with all of the financial maintenance covenants in its credit facility at the end of each affected quarterly period.
Some questions:
- Is Valeant’s clearing itself of any further fraud merely going to be the latest fraud in this epic saga of alleged criminality?
- What happens when the next skeleton emerges from the closet?
- Is this merely a last ditch effort to regain leverage in the covenant renegotiation discussions with lenders?
- And just who can possibly take anything Valeant’s deeply entrenched board says seriously any more?
We will find out, for now however, a sudden short squeeze has pushed the stock up nearly 17% higher, from fresh multi-year lows around $25 to just over $30.
We doubt this price will last.
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