Salix slides with onslaught of negative news; Southeast PowerGen, Essar, US LBM break

By Sara Rosenberg

New York, Nov. 7 – Salix Pharmaceuticals Ltd.’s term loan weakened in trading on Friday on the back of announcements of the review of characterizations of wholesaler inventory levels, the resignation of its chief financial officer and earnings results.

In more happenings, Southeast PowerGen LLC’s credit facility made its way into the secondary market with levels on its term loan quoted above its original issue discount, and Essar Steel Algoma Inc. and US LBM broke for trading as well.

Salix Pharmaceuticals’ term loan was lower in trading on Friday as investors reacted to investigation news, a management change and financials, according to traders.

The term loan was quoted by one trader at 97¼ bid, 97¾ offered, down from par bid, par ¼ offered, and by a second trader at 97 bid, 98 offered, down from 99 bid, par offered.

In the morning, the company revealed in a 10-Q filed with the Securities and Exchange Commission that it retained outside counsel and is conducting a review of issues related to management’s prior characterizations of wholesaler inventory levels.

And, on Thursday, the company disclosed that Adam C. Derbyshire, executive vice president, finance and administration, and chief financial officer, resigned. Timothy J. Creech was appointed as acting chief financial officer, and the company has hired Korn Ferry, an executive search firm, to assist in identifying an individual to be the permanent chief financial officer.

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