Bank of America has thrown a $40 million lieline to aaiPharma. The question now is whether aaiPharma’s debt holders will permit the suddenly struggling pharmaceutical firm to draw on the funds.

aaiPharma, battered by accusations of inflated sales and conducting an internal inquiry that it says already has uncovered problems, received more bad news on Thursday. Both Moody’s and Standard & Poor’s cutting their ratings on aaiPharma’s debt. The company owes more than $300 million.

Dr. Frederick Sancillio, who founded the company, returned as chief executive officer this week. He also brought in Gregory Rayburn, a well-known turnaround executive who last worked at WorldCom, as interim chief operating officer.

In a statement, Rayburn said the new credit line is a sign of the new management team’s progress in trying to right the aaiPharma ship.

“We have made a considerable amount of progress with our lenders in a short amount of time and we are confident that the new facility will provide for the company’s liquidity needs,” he said.

A $9 million payment is due today, and the company reported some $9.6 million cash on hand as of Dec. 31.

Late Wednesday, aaiPharma disclosed Bank of America’s agreement to offer $40 million. The firm’s other $100 million is in jeopardy due to the delay of its annual financial report to the Securities and Exchange Commission.

In a statement, aaiPharma pointed out that “a majority of the company’s existing senior credit facility lenders and senior subordinated debt holders” must agree to permit it to use the credit line.

Because of that delay, aaiPharma’s stock is not listed on Nasdaq’s regular trading schedule. It is now listed as “aaiie” rather than “aaii”.

The stock closed down 19 percent, or $1.55, to a new 52-week low of $6.63 — one fifth its value of earlier this year.

Both Moody’s and S&P were critical of aaiPharma’s prospects in their downgrade statements.

Moody’s cited several factors, such as likely restatements of earnings and the “possibility” that the $9.6 million payment due today would be missed. Moody’s added that the delay in aaiPharma’s SEC filings meant that subordinated notes “may be in default.” Moody’s also pointed out the likelihood of a federal investigation into aaiPharma, which the company acknowledged earlier this week.

“Moody’s rating review will focus on new management’s efforts to successfully negotiate with existing creditors and develop banking proposals to augment liquidity,” Moody’s said.

S&P noted that it has “significant concerns” about aaiPharma’s short-term liquidity.

aaiPharma is selling a subsidiary for $100 million, with the deal expected to close in June, S&P pointed out, adding: “A timely sale is essential, as aaiPharma faces a $31 million product rights payment in August.”

aaiPharma: www.aaiPharma.com