Mallinckrodt down 36% on heightened bankruptcy risk

Mallinckrodt (MNK -36.4%) slumps on average volume on the heels of its disclosure that informal communications with advisors to lenders about amending its credit agreement and obtaining new term loans have come up empty. The company says it intends to initiate discussions with certain debt holders about potential refinancing alternatives.

On a more positive note, it reports that the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS), the defendants in its lawsuit over a proposed reduction in the base price of Acthar Gel used to calculate rebates, have notified the district court that CMS will refrain from locking the company out of its online data reporting system for at least the next 60 days, delaying any potential suspension of the company from the Medicaid program until the end of August (assuming that the company enters its data through the end of May).

Its motion for a stay and reconsideration of the court’s decision remains pending. If unsuccessful, it will appeal.

https://seekingalpha.com/news/3553031-mallinckrodt-down-36-on-heightened-bankruptcy-risk