Intelsat notes improve as unit begins tender offer; Community Choice notes see gains

By James McCandless

San Antonio, Sept. 10 – A new week in trading saw the distressed debt market remain focused on news-specific names.

Intelsat SA’s notes improved as a subsidiary announced a cash tender offer for a series of outstanding senior notes due 2020.

Community Choice Financial Inc.’s notes rose after the company announced that it had gained $45 million in financing late Friday.

American Tire Distributors’ paper declined. Last Tuesday, the company announced that it had reached a recapitalization agreement with a majority of bondholders.

Frontier Communications Corp.’s notes ended mixed. The company recently posted earnings that disappointed analysts and led to a ratings downgrade.

Digicel Group Ltd.’s notes gained. Last week, the company extended its early tender deadline for two series of notes.

New Gold Inc.’s paper was level after gaining the attention of traders over the last month.

Intelsat rises

Luxembourg-based satellite communications company Intelsat’s notes improved, traders said, as subsidiary Intelsat Jackson Holdings SA began a cash tender offer to purchase any and all of its $1,751,119,000 outstanding 7¼% senior notes due 2020 on Friday.

Last Wednesday, Intelsat Jackson priced $2.25 billion of six-year senior notes and also announced plans for the tender offer. The tender offer was conditioned on the issuance of the new notes.

“Intelsat was definitely on the tip of everyone’s tongue today,” a trader said.

The Intelsat Jackson 5½% notes due 2023 picked up about ½ point to close at around 91 bid. The Intelsat (Luxembourg) SA 8 1/8% notes due 2023 rose about ½ point to close at around 86 bid.

On Friday, the 5½% notes lost about ¾ point and the 8 1/8% notes fell about ½ point.

Community Choice gains

Community Choice’s notes improved on Monday, market sources said.

The 10¾% notes due 2019 added about ¼ point to close at around 82 bid.

Late Friday, the company announced that it had secured a $45 million revolving credit facility. The terms of the financing require the company to exchange two-thirds of its 10¾% senior secured notes due May 1, 2019 and its 12¾% senior secured notes due May 1, 2020 for equity by Nov. 30.

Following the news on Friday, the 10¾% notes dropped 1 point.

Last week, a subsidiary of Community Choice issued a $42 million offering of first-lien senior secured notes due 2020.

Community Choice is a Dublin, Ohio-based alternative financial services company.

American Tire down

In other activity, American Tire’s paper declined, with its 10¼% notes due 2022 down 1 point to close at 28½ bid, traders said.

The Huntersville, N.C.-based tire distributor announced last Tuesday that it had reached an agreement with 70% of its noteholders to convert their debt into a 95% stake of its restructured common equity. The agreement reduces the company’s debt by $1.1 billion

Talks are still ongoing to come to an agreement to extend the maturity of its revolving credit facilities and term loan.

On Wednesday, Moody’s Investors Service downgraded the company’s probability of default rating and senior subordinated notes rating. S&P Global Ratings lowered its long-term issuer credit rating and issue ratings on its senior subordinated notes.

Volume names trade

Frontier Communications notes started the week mixed.

The 7 5/8% notes due 2024 gained about ½ point to close at around 63¾ bid. The 10½% notes due 2022 were level at around 87¾ bid. The 11% notes due 2025 rose about ¼ point to close at around 77 bid.

A recent second-quarter earnings report led to S&P’s downgrading Frontier’s issuer credit rating and senior unsecured debt rating and affirming a negative outlook.

Frontier is a Norwalk, Conn.-based wireline communications company.

Meanwhile, Bermuda-based mobile phone network provider Digicel’s notes traded up.

On Friday, the company announced that it extended the early tender date for its previously announced exchange offers to 11:59 p.m. ET on Sept. 28.

The 6% notes due 2021 added about ¼ point to close at around 91¾ bid. The 7 1/8% notes due 2022 picked up about 1 point to close at around 60¼ bid.

On Friday, the 6% notes lost ¼ point and the 7 1/8% notes fell ¾ point.

Separately, Toronto-based New Gold’s paper was level despite high trading volume.

“It’s a name to watch,” a trader said. “It might be pegged to the tariff situation but these notes keep falling. It was trading around par about a month ago.”

The 6¼% paper due 2022 was level at 82¾ bid.

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