On March 6, 2024, after market hours, Avid Bioservices filed a current report on Form 8-K with the SEC, in which it stated that it had “received an acceleration notice (the “Acceleration Notice”) from a holder of its 1.250% Exchangeable Senior Notes due 2026 (the “2026 Notes”). The Acceleration Notice stipulates, among other things, that (i) the Company did not remove the restrictive legend on the 2026 Notes by March 17, 2022 as required under the indenture governing the 2026 Notes (the “2026 Notes Indenture”), (ii) due to such failure, additional interest has accrued thereafter at a rate of 0.50% per annum (the “Additional Interest”), (iii) such Additional Interest has not been paid by the Company as of the date of the Acceleration Notice, which constitutes an event of default under the 2026 Notes Indenture (the “Event of Default”), and (iv) such holder is the beneficial owner of at least 25% in aggregate principal amount of the outstanding 2026 Notes and therefore has the right to accelerate all of the 2026 Notes.”

Further, “[a]s a result of such interest payment default and pursuant to the terms of the 2026 Notes Indenture, such holder declared 100% of the principal of, and accrued and unpaid interest on, the 2026 Notes to be due and payable immediately (the “Acceleration Event”). The accelerated amount, inclusive of principal and interest due and payable, as of February 29, 2024, the date of acceleration, was approximately $146.0 million and accrues interest at 2.75% per annum until paid in full.”

As a result, Avid Bioservices announced that “the Company may not be able to timely file its Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2024, particularly in the event the Company determines that some or all of the financial statements included in the Relevant Reports must be restated.”

On this news, the price of Avid Bioservices stock fell by $2.69 per share, or 30.6%, to close at $6.10 per share on March 7, 2024.