Valeant Pharmaceuticals receives default notice

Lenders warned Valeant Pharmaceuticals that it has defaulted on certain debts after failing to submit a public filing, giving the embattled drugmaker two months to rectify the matter.

Valeant said Friday morning that it had received a notice of default from two lenders on its senior notes. The warning stems from the company's failure to file its first-quarter earnings statement, also known as a 10-Q form, in a timely manner to the U.S. Securities and Exchange Commission.

Loan terms give the company 60 days from the time it received the notice, which occurred Thursday, to file the 10-Q. Valeant on Friday reiterated a previous statement that it will file the form on or before June 10.

Filing earnings reports on time became more difficult after Valeant's board launched an investigation into the company's past dealings with a mail-order pharmacy business that distributed its medications to patients.

Valeant was initially forced to restate $58 million in earnings from late 2014 into 2015 but said in April that it had discovered no additional accounting errors and was closing the probe.

Loan defaults can occur even when a debtor is making on-time payments. Lenders often place certain covenants in loan terms to ensure a well-run company.

The company has come under fire for its controversial price hikes and its past ties to mail-order pharmacy business Philidor Rx Services. Federal prosecutors and the U.S. Securities and Exchange Commission are investigating.

Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.