Shares of aaiPharma ( AAIIE) advanced Wednesday, one day after the company announced that key bondholders endorsed a financial restructuring.

Recently, the stock was up 14 cents, or 1.8%, to $8.05, continuing the mostly upward trend in recent days as investors anticipated some good news about the Wilmington, N.C., drug company.

"This consent removes a significant roadblock," said David W. Maris of Banc of America Securities, in a Wednesday research report.

"The company is seeing some light at the end of the tunnel and, unlike the recent past, this time it doesn't seem to be a train," said Maris. He maintained his neutral rating on the stock, noting that aaiPharma is a stock for "extreme risk tolerant investors not afraid of ugly news flow."

Maris said the bondholders' consent is only one of three hurdles aaiPharma needs to overcome to emerge from its financial distress. It must obtain approval from senior bank lenders to support the sale of its intravenous nutrition products business, which will provide $100 million in badly needed debt relief. The sale has been agreed to in principle.

And aaiPharma must complete the sale of the nutrition products business to meet requirements established by Silver Point Finance, a unit of Silver Point Capital, a Greenwich, Conn.-based provider of credit analysis and credit-related investments. Silver Point will become the drug company's new senior lender by underwriting a $140 million credit facility.

(Maris doesn't own shares; his firm has had an investment banking relationship within the last 12 months and is a market maker in aaiPharma's stock.)

The first step for financial recovery started with holders of $175 million in 11% senior subordinated notes due 2010. The company said late Tuesday, after markets had closed, that 98% of these notes had been pledged for the restructuring. If the bondholders had balked, the company could have been in default within 60 days.

The company said late Tuesday that it intends to close its new credit facility, complete the nutrition products sale and, most importantly, pay a $9.6 million bond interest payment "as soon as practicable." The failure to make the interest payment by April 1 set the default threat in motion.

The company has been plagued by a series of financial and managerial problems that have caused its stock to plummet from a 52-week high of $31.85 on Jan. 21 to a low of $5.95 on March 31. Bond rating agencies have further lowered already-below-investment-grade ratings on aaiPharma debt issues.

The company missed a March 15 deadline and a two-week extension for filing its 10-K annual report with the Securities and Exchange Commission, which triggered a warning from the Nasdaq about a possible delisting. The delay was caused by an ongoing internal investigation of what aaiPharma defined as "unusual sales" for certain product lines last year. As the investigation by independent board members and an outside law firm continues, aaiPharma has told investors that fourth-quarter 2003 results will be "materially adjusted." In addition, aaiPharma has withdrawn financial guidance for 2004.

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