The bank debt levels for aaiPharma's $156 million term loan "B" have been sliding down over the last three weeks as the company comes under scrutiny for unusual pharmaceutical sales in the second half of 2003. The name was quoted as low as the 94-96 context after tumbling from levels north of 101, where the paper was trading a month ago. The company is conducting an inquiry into the sales and must materially adjust the financial information contained in a February release as well as statements in its quarterly report for the period ended Sept. 30.
In addition, after being told by its lenders that it will not be able to access its $100 million revolver, aaiPharma signed a commitment letter with Bank of America for a $40 million, 15-month priority revolver. The new loan will be subject to the consent of a majority of the lenders and senior bond holders. aaiPharma lost access to its revolver after announcing that it will be unable to file its 10-K report by the end of a 15-day grace period.
Adding to its troubles, aaiPharma had an interest payment of $9.6 million due April 1 on its $175 million of senior subordinated bonds and a $31 million product rights payment in the near term. Lenders have the right to block the company from making the bond payment, but at press time it could not be determined if the payment would be made. B of A, Wachovia Securities and CIBC World Markets lead the company's syndicated credit facility.
The specialty pharmacy company has appointed Gregory Rayburn, a managing director with restructuring firm FTI Consulting, as interim chief operating officer. His role includes negotiating with the company's lenders. Calls to Rayburn were referred to a spokeswoman, who declined to comment.