April 5, 2016 / 1:22 PM / 2 years ago

UPDATE 2-Valeant says accounting review finds no new issues, shares jump

(Adds details, analysts comments, updates shares)

April 5 (Reuters) - Embattled drugmker Valeant Pharmaceuticals International Inc said on Tuesday that a board committee had completed a review of the company’s accounting practices and had not found any new items that would require additional restatements.

The Canadian drugmaker’s U.S.-listed shares rose as much as 14 percent, their biggest rise this year.

Valeant said last month that a board committee probing the company’s ties to specialty drug distributor Philidor Rx had found accounting problems dating back to December 2014.

The company said on Tuesday that it was on schedule to file its annual report on or before April 29 and that it would be in compliance with all financial covenants in its credit facility.

Valeant said last week that it had asked its lenders for another month to file its annual report, seeking to reduce the risk of a default on its $30 billion debt if it missed the April 29 deadline.

“We would expect the shares to rally on what appears to be a better than expected outcome from the Ad Hoc committee,” RBC Capital Markets analyst Douglas Miehm wrote in a client note.

Completion of the review should help Valeant as it works with its lenders to amend the terms of its debt, he said.

Valeant was originally due to file its annual report by March 15 but said in February that it would not meet that deadline as a result of the review, which started in late 2015.

“Valeant needs to rebuild credibility ... and obviously a relatively unsurprising annual report would be a significant step forward,” BMO Capital Markets analyst Alex Arafai wrote.

Valeant, under Chief Executive Michael Pearson, was an investor favorite for years as it went on an acquisition spree and delivered double-digit profit growth.

But through Monday’s close, its shares had lost about 90 percent of their value since August when its aggressive acquisition strategy and practice of sharply raising drug prices come under public, political and regulatory scrutiny.

Valeant is also under investigation by the U.S. Congress and various U.S. government agencies over to its strategy and links to links to Philidor, which has since shut down.

Valeant said last month that Pearson would step down as soon as a replacement is found.

Valeant’s U.S. shares were up 9.8 percent at $28.67 in morning trading. The company’s Toronto-listed shares were up 7.8 percent at C$37. (Reporting by Ankur Banerjee and Arathy Nair in Bengaluru; Editing by Saumyadeb Chakrabarty and Ted Kerr)

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