News that Elan would incur more charges as it tries to restructure its business sent the Irish drug company’s shares into a tailspin on the Irish Stock Exchange today.
The company also said it had sold certain royalty rights on some of its products - effectively giving up some future revenue for cash - but firmly rejected suggestions it was facing a liquidity crisis in servicing its debt.
Elan shares closed down 51 per cent in Dublin at euro2.45, while on Wall Street, where the stock is more heavily traded, it was down $2.76 or 56 per cent at $2.16, valuing the firm at about $750 million.
"There is a misperception out there that the company has a liquidity crisis, which is simply not the case," chairman and chief executive Mr Donal Geaney said today.
"The company has...substantially more cash than the sum of all its obligations over the next two years, so we have more than enough cash to meet our requirements." In a statement accompanying the firm's 2001 annual report for the US Securities and Exchange Commission, Mr Geaney said Elan faced "the most challenging time it its corporate history".
Elan's stock has been beaten down more than 90 per cent from 52-week peaks amid a global controversy over corporate accounting that has engulfed giants like Enron, WorldCom and Xerox.
"The market itself at the moment is incredibly nervous, and as long as investors are concerned they will shoot first and ask questions later," Mr Geaney said.
"When people really look at and analyse carefully Elan's position they will see the company is worth a substantial amount of money, and many, many multiples of today's price."
The once high-flying firm said it could not give any immediate figures on the financial impact of its recovery plan, which involves scaling back operations, or the loss in its investment portfolio, which it valued at $2.1 billion last year.
It will release financial details of the plan, announced last month, next week.
Elan dismissed speculation it was facing a cash squeeze, saying it had total current financial assets of $2.2 billion.