Aceto Corp. (NASDAQ: ACET) saw its shares halved on Thursday after the company gave a critical update. There is a lot going on for Aceto in this update, and most of it is not good news. Amid credit negotiations there are also changes at the highest level of management, making this a tough pill to swallow.
Essentially the company announced, in light of the persistent adverse conditions in the generics market, it is negotiating with its bank lenders a waiver of its credit agreement with respect to its total net leverage and debt service coverage financial covenants in the fiscal third quarter. Also it said that the financial guidance issued in February should no longer be relied upon.
Additionally, the firm anticipates recording noncash intangible asset impairment charges, including goodwill, in the range of $230 million to $260 million on certain currently marketed and pipeline generic products as a result of continued intense competitive and pricing pressures.
At the same time, the board of directors announced the resignation of Chief Financial Officer Edward Borkowski and the appointment of Rebecca Roof as Interim CFO.
Also, the board directed that the company suspend providing further financial guidance for at least the balance of the fiscal year.
Chairman Al Eilender commented:
Given continued headwinds in the generics market, the Board has taken decisive action by bolstering the Company’s senior leadership, engaging in proactive discussions with its secured lenders, and initiating a thorough evaluation of strategic alternatives. The Board looks forward to working with and supporting management throughout this process and appreciates the continued dedication of its employees and other stakeholders while it navigates this difficult industry environment.
Shares of Aceto were last seen down nearly 60% at $2.98. The consensus analyst price target was $9.00, and the prior 52-week range was $6.85 to $17.10.