(Bloomberg) — Concordia International Corp.’s bonds slid for a second day after the Canadian drug company said it may restructure more than $3 billion of debt that it ran up during an acquisition spree.
Management is putting together a strategic plan during the first half of 2017 and evaluating options that could include a refinancing or restructuring of the company’s debt, Chief Financial Officer Ed Borkowski told investors Wednesday during a conference call to discuss fourth-quarter results that missed Wall Street estimates. Other avenues could include selling assets or raising capital from other sources, he said.
“I heard loud and clear and fully understand that Concordia has been through a very challenging year and those challenges have caused frustration for many stakeholders,” Allan Oberman, who took over as chief executive officer in November, said during the call. “I feel your pain.”
The Oakville, Ontario-based company’s 7 percent notes due in 2023 fell as much as 3.5 cents to a record low of 22 cents on the dollar at 11:30 a.m. in New York. That’s on top of Wednesday’s plunge of 8.5 cents, according to Trace, the bond- price reporting system of the Financial Industry Regulatory Authority.
Concordia, like its larger rival Valeant Pharmaceuticals International Inc., grew quickly by snapping up drug companies and products with borrowed money, swelling its debt by more than 10-fold in three years. And like Valeant, Concordia is being hobbled by slow growth and an investigation of its pricing policies. The company posted a $1.3 billion loss from continuing operations last year, the stock fell more than 90 percent in 12 months and S&P Global Ratings said Wednesday it may downgrade the company’s junk-rated debt again over the medium-term.
Concordia told investors in an annual regulatory filing Thursday that it expects to have enough cash over the next 12 months to run its business and pay its debts, it hasn’t violated any loan covenants and there aren’t any significant maturities until 2021. Nevertheless, the company “cannot currently provide any assurances with respect to its ability to refinance its long-term debt obligations when they become due,” and cutting debt may be necessary before then, according to the filing.