WILMINGTON,AAIPharma will emerge from bankruptcy as a privately held company as soon as February.
AAIPharma said Friday it had won approval of a federal bankruptcy court in Delaware for its Chapter 11 reorganization plan. The company wants to put all details in place by February, it said in a statement.
The drug development and services firm filed for bankruptcy last May. In July, it sold off its pharmaceutical division for $209 million.
The reorganization plan was announced shortly before the markets closed on Friday. AAIPharma (Pink sheets: AAIIQ) shares closed at 2 Â½ cents, a 52-week low. Its stock had traded as high as $3.63 over the past year.
AAIPharma also said it had secured commitments to refinance its debtor-in-possession bankruptcy financing and also for working capital. The company said in May it had secured $210 million in debt financing.
“We are very pleased that the Court has confirmed our plan of reorganization,” said Ludo Reynders, the president and chief executive officer of AAIPharma. “Upon consummation of the plan, AAIPharma will emerge as a healthy company with restored financial strength to meet the needs of our customers and to provide a stable work environment for our employees. We look forward to the many new opportunities available to the Company following completion of our reorganization.”
The reorganization plan has been approved by creditors, the company said.
Under the plan, bondholders such as JPMorgan Securities will own virtually all the equity in AAIPharma, and the company will go private.
AAIPharma has set aside a $4 million pool for holders of unsecured claims.
Also, stockholders will receive no distribution and all shares of common stock will be cancelled, the company added.
With the sale of its pharmaceutical division, AAIPharma now concentrates on pharmaceutical, analytical, bioanalytical, clinical and regulatory affairs services.
AAIPharma’s route to bankruptcy began when questions were raised about sales practices. A former chief operating officer, David Hurley, has already plead guilty to charges related to a “scheme” to inflate sales results. The company launched an internal investigation in March of 2004.
AAIPharma stock traded as high as $31.50 in the first quarter of that year.
Frederick Sancilio, the founder of the company, came out of retirement to replace CEO Philip Tabbiner as the investigation unfolded. Sancilio was replaced by Reynders, a former executive at Quintiles, in September of 2004.