by David Kranzler
Investment Research Dynamics
Valeant stock is down another 10% today. I’m wondering if some of the Wall Street Journal writers are reading this blog because the WSJ published an article late yesterday in which it reported that VRX could be forced to write-down its goodwill. I published an article two days ago in which I analyzed why VRX’s goodwill “asset” was likely fraudulent.
VRX said it won’t meet the March 15th deadline to file its delayed 10-K. It has until March 30th to file, otherwise it has 30 days before the bank creditors can declare an event of default and demand repayment of the debt. Because VRX’s tangible assets are worth less than the amount of debt outstanding, the most likely scenario is that the banks will grant covenant relief. At that point, VRX will attempt to sell assets in order to help pay down debt.