WILMINGTON, NC — Replacing the founder and chairman of aaiPharma was not an inexpensive decision, according to a SEC filing the pharmaceutical firm made on Wednesday.

Fred Sancilio was replaced as chairman of the board, president, CEO and chief scientific officer and will receive “approximately” $1.9 million in severance pay, aaiPharma said in the filing. He also is entitled to accrued salary and bonuses.

Sancilio will remain a director of the firm until his term expires in 2006.

The company said under an amended employment agreement that his benefits would be paid over a two-year period rather than in a lump sum.

Ludo Reynders, a former executive at Quintiles, was named CEO on Monday. He will receive a base salary of “not less than $550,000”, aaiPharma disclosed.

Late Thursday night, aaiPharma also announced that it would be unable to pay a $10 million interest payment due on notes that mature in 2010. In a statement, the company said it “will use the 30-day grace period provided under the Notes for failure to pay interest to enter into discussions with an ad hoc committee formed by certain holders of the Notes.”

More bad news could come, too.

“The Company believes there is a likelihood that it will be in default of certain financial covenants under its senior credit facility, and is in ongoing active discussions with its lender to seek waivers and/or consents for these potential defaults,” aaiPharma said.

aaiPharma stock closed at $1.55 on Thursday, down 4 cents. Its 52-week high is $31.85.

In the same filing, aaiPharma disclosed further reductions in its workforce. Layoffs were made on Sept. 16, 20, 21 and 24 totaling 4 percent. The company estimated severance costs to total $1.5 million.

Sancilio, who helped launch the company in 1979 and ran it until 2002, returned to the CEO chair on March 29 nearly a month after the financial meltdown at aaiPharma started. On March 1, the company said it was going to have to restate earnings based on how bookings of drugs had taken place.

Philip Tabbiner, the CEO at the time, was replaced by Sancilio.

The financial reviews triggered a crash in the stock price, class-action lawsuits, and a federal investigation.

aaiPharma: www.aaiPharma.com