Go to the conference call this week and note that of more than a dozen questions there were no serious issues raised by the analysts on the debt! It is what it is but with $100's of million in free cash flow, it can be amortized.
The vast majority of that debt doesn't become due until 2010 to 2013. So yes it's a problem for then. In the meantime they can restructure that debt, extend it, and improve upon it. They are now a cash generating machine, with no dividend. So paying down the debt will be easier. I think it is much more likely that IAR will be consolidated with another company who will assume and restructure IAR's debt, hand out 1000s of layoff notices, and make even more cash by doing so. So the debt is a long term problem that needs to be addressed -- but it's very possible to do so without adversely affecting the company's ability to make money for shareholders.
I really believe that the 30 million shares short which is certainly not a bunch of little guys, orchestrated that "downgrade" to help the shorts (hedge funds and other big players). Probably Briefing.com was involved as well. There should be an SEC investigation on how this happened. A lot of longs were hurt by being spooked into selling.