Shares of pharmaceuticals company Valeant fell 51% on Tuesday after the company missed revenue expectations and cut its forward guidance.
The company said low sales were behind a $336.9m (£238m) fourth quarter loss.
It also lowered its forecast for first quarter revenue to between $2.3-2.4bn, from a range of $2.8bn to $3.1bn.
Tuesday's earnings report is preliminary and Valeant could face default if it fails to file the audited report by the end of the day.
If Valeant misses
Tuesday's deadline bondholders could file a notice of default on the
grounds the company has failed to meet reporting requirements.
If Valeant misses
a second deadline on 29 April deadline to file its financial statement
with US regulators, some of its bank creditors could also demand
repayment.
Debt
In February, Valeant
announced it would delay filing its annual report while its board
looked into its accounting practices. The company also said it would
resubmit financial statements for 2014 and 2015.
As of 30 September, the Canadian drug company had close to $30bn of long-term debt, mostly accrued from a string of drug acquisitions.
Valeant
is also facing an investigation by the Securities and Exchange
Commission into its relationship with pharmacy Philidor, and an
investigation by the US Congress into its drug pricing.
The
embattled company has cut its ties with Philidor, which it was accused
of using to fake sales to force up the price of its drugs.
"The
challenges of the past few months are not yet behind us and our goal for
2016 is to better balance our priorities across all of our
constituencies- physicians, patients, employees, payers, debt holders
and shareholders," chief executive Michael Pearson said in a statement.
Pro-active role
In
an attempt to improve matters Valeant has appointed three new directors
to its board. One of the new appointees is from Pershing Square - one
of Valeant's largest shareholders- which has been pushing for change.
On
Tuesday, Pershing Square's chief executive Bill Ackman sent a letter to
his investors that said the fund would "take a much more proactive
role" in Valeant.
In the letter, Mr Ackman said he felt default was unlikely.
"While
we believe that it is highly likely that the banks will provide a
waiver, uncertainty about the potential for a default creates enormous
investor fear," Mr Ackman wrote.
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