PetSmart mixed after hiring debt advisers; Murray Energy declines amid debt restructuring agreement

By James McCandless

San Antonio, June 8 – As the week came to a close, the distressed debt market saw little activity to end a low-volume week.

PetSmart, Inc. notes were mixed after Wednesday’s announcement that the company has hired advisers to help reduce its $8 billion debt.

Murray Energy Corp. issues fell, capping off a week of activity spurred by Monday’s announcement of a debt restructuring agreement made with portions of its noteholders and lenders.

Community Health Systems, Inc. paper declined. This week, a subsidiary amended the terms of an exchange offer.

Intelsat SA notes rose. Recently, the company issued its Q1 report, missing analyst projections. Frontier Communications Corp. issues were mixed. A recent failed auction for the company’s Florida assets have hurt investor confidence. Mallinckrodt plc declined.

PetSmart mixed

Phoenix-based pet supplies retailer PetSmart notes were mixed, traders confirmed. On Wednesday, the company announced that it had hired investment bank Houlihan Lockey, Inc. as restructuring advisers. The firm will work towards solutions for reducing the company’s $8 billion in debt.

On Tuesday, the company jarred its debt investors by moving 36.5% of its stake in profitable e-commerce segment Chewy.com to its private equity owner BC Partners and an unrestricted subsidiary. The site was purchased last year for $3.35 billion, partially financed with $2 billion of debt.

“It wasn’t as bad as it could’ve been,” a trader said. “They could’ve moved all of it out of bondholders’ hands, which explains why those notes have made some gains this week.”

The 5 7/8% notes due 2025 lost about ¼ point to close at 75½ bid. The 8 7/8% notes due 2025 gained about ½ point to close at around 58¼ bid.

On Thursday, the 5 7/8% notes were level and the 8 7/8% notes fell ¼ point.

Murray Energy off

St. Clairsville, Ohio-based coal producer Murray Energy issues declined, market sources confirmed. On Monday, the company reached an agreement with a portion of its noteholders and bank lenders on a debt restructure plan that will refinance its 11¼% senior secured notes due 2021 and its term loans.

Holders of 71% of the 11¼% notes and 61% of the term loans have entered into a transaction support agreement with the company to participate in the refinancing.

The 11¼% paper due 2021 lost ¾ point to close at 57¼ bid.

Community Health down

Franklin, Tenn.-based hospital operator Community Health Systems paper fell, traders confirmed. On Wednesday, subsidiary CHS/Community Health Systems, Inc. amended the terms of its exchange offers because the amount tendered for exchange fell short of the 90% threshold for one series.

The amendment increases the coupon on the 2023 notes to 11% for one year after issue, up 112.5 basis points from 9 7/8%.

The 6 7/8% paper due 2022 lost about ¼ point to close at around 54½ bid.

Volume names trade

Luxembourg-based satellite communications company Intelsat notes improved. A recent Q1 report showed a 56 cents per share loss, missing analyst estimates of 41 cents per share.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 traded up ¼ point to close at 85½ bid. The 8 1/8% notes due 2023 rose about ¾ point to close at around 80½ bid.

Norwalk, Conn.-based wireline name Frontier Communications issues were mixed. A recent failed auction for the company’s Florida assets has curtailed investor confidence.

The 7 5/8% notes due 2024 gained about ¼ point to close at around 69½ bid. The 10½% notes due 2022 shaved off about ½ point to close at around 90¼ bid. The 11% notes due 2025 lost about ½ point to close at around 80¾ bid.

Britain-based drug maker Mallinckrodt’s 4¾% paper due 2023 lost about ¾ points to close at around 80½ bid.

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