Valeant Pharmaceuticals cut its 2016 revenue forecast by about 12 per cent on Tuesday and said a delay in filing its annual report could pose a debt default risk, causing its shares to plunge.

The Canadian drugmaker, the target of US investigations into its business and accounting practices, reiterated that it would put off filing its annual report with US regulators but for the first time raised the spectre of a default.

Valeant, whose US-listed shares fell by more than 45 per cent in US morning trading, said failure to file the report by Tuesday’s deadline would mean it would be in breach of a covenant and that holders of at least 25 per cent of any series of notes may deliver a notice of default. Defaulting on debt could prompt lenders to demand faster repayment and place restrictions on Valeant’s ability to borrow further.

As of Sept. 30, Valeant had about $30 billion of long-term debt. The company said it would repay at least $1.7 billion this year, down from an earlier forecast of $2.25 billion. However, chief executive Michael Pearson said he was "comfortable" with the company's liquidity and expected Valeant to meet obligations.

“Our business is not operating on all cylinders, but we are committed to getting it back on track,” said Pearson, who returned last month from a medical leave of absence.

Valeant, which has rapidly expanded in recent years through acquisitions, is now looking to sell non-core assets, Pearson said, without being specific. The company said last month it would delay filing its annual report while a board committee looked into its accounting practices. It also said it would restate 2014 and 2015 financial statements.

Valeant’s troubles began late last year when questions were raised about its drug pricing and allegations emerged that it was using distributor Philidor RX Services to inflate revenue in its dermatology business. Laval, Quebec-based Valeant has since cut ties with Philidor, which has gone out of business.

Reuters