Alta Mesa dives as Eagle Ford sale nixed; iHeart down; MolyCorp up with production results

By Stephanie N. Rotondo

Phoenix, Feb. 2 – The distressed debt market experienced a Super Bowl hangover on Monday, and inclement weather from the Midwest to the Northeast was not helping.

“It was an abysmal Monday following the Super Bowl,” one trader said. “It seemed like nobody was around.”

Another trader noted that desks started to empty in the afternoon, as the weather began to get worse.

But despite the limited liquidity, Monday was jam-packed full of news that drove certain names all around.

Alta Mesa Holdings LP, for instance, got whacked in trading after the company said a sale agreement of its Eagle Ford asset was terminated.

The company’s bonds were seen down as much as 30 points on the day.

iHeartMedia Inc.’s paper was also weaker, as a sale of Clear Channel Outdoor’s European advertising unit was put on hold due to a weakening euro.

On the upside, MolyCorp Inc. got a sizable boost as the company released its latest production report, showing an increase in production from the previous quarter.

Also higher – or unchanged, depending on whom you asked – were RadioShack Corp.’s bonds. The company is said to be in talks to sell half of its store leases to Sprint.

Alta Mesa beaten down

Alta Mesa Holdings’ 9 5/8% notes due 2018 got hammered Monday after the company said Friday that a planned sale of some of its Eagle Ford shale assets had been nixed.

The news “seemed like it was weighing heavily” on the bonds, a trader said, seeing the issue closing at its intraday low of 52. The paper had opened around 62 and was trading in the low-80s before that, he said.

“Whoa, those were really off a lot,” another trader said, also placing the issue around 52. “Obviously the termination of that deal was what drove the bonds.”

A third trader said Alta Mesa “took a pretty good hit,” estimating the bonds down as much as 28 points as they fell to 57 after trading in 80s last week.

Yet another source said the debt had a “pretty significant” fall, dropping into the low- to mid-50s from the high-70s to low-80s previously.

The Houston-based oil and gas company first announced the sale on Dec. 12. ReOil Eagle I LLC had agreed to purchase certain assets for a price of up to $210 million. Alta Mesa was to initially receive $175 million, then another $25 million contingent upon the drilling of 10 upper Eagle Ford Shale wells.

Another $10 million would be tacked on if the 2016 Nymex strip closed above $80 per barrel for two consecutive months in 2015.

However, Alta Mesa said it never received the initial payment and that certain other obligations were also not met.

Energy up with oil

Elsewhere in the world of oil and gas, rising oil prices were pushing up most energy names.

West Texas Intermediate crude gained $1.50, or 3.11%, closing at $49.74 per barrel. Brent crude ended at $54.80, up $1.80, or 3.42%.

Those gains came as union workers at U.S. refineries and chemical plants were striking for a second day, demanding a new national contract.

SandRidge Energy Inc.’s debt ended mostly higher, putting on 1 to 2½ points, according to a trader.

The trader pegged the 7½% notes due 2021 at 71, a point better, while the 8¾% notes due 2020 ended up a similar amount at 72.

The 8 1/8% notes due 2022 rose 2½ points to 70½, he said.

However, he saw the 7½% notes due 2021 falling almost a point to 68¾.

At another desk, the latter issue was deemed up a deuce at 70¾ bid.

A trader also saw Samson Investments Co.’s 9¾% notes due 2020 inching up half a point to 31¾.

In the preferred stock arena, Goodrich Petroleum Corp.’s preferreds were meantime seen getting a nice boost as well.

The 10% series C cumulative preferreds (NYSE: GDPPC) were up $1.68, or 27.77%, at $7.73. The 9.75% series D cumulative preferreds (NYSE: GDPPD) gained $1.75, or 29.66%, trading at $7.65.

iHeart delays sale

iHeart debt was declining Monday as a sale of Clear Channel Outdoor’s European advertising unit was said to be delayed.

A trader said the 14% notes due 2021 fell almost 3½ points to 78¾. The 10% notes due 2018 dipped 2½ points to 84¼.

The 9% notes due 2020 were then seen at 95, a decline of over 2 points on the day. The 9% notes due 2019 fell 1½ points to 96.

And, the 6½% notes due 2022 slipped half a point to 102.

Another trader said that “iHeart bonds were off a couple points,” placing the 10% notes around 84 and the 14% notes “sub-79.”

“They were definitely one of the bigger movers,” he said.

The deal – which was being facilitated by Moelis and Citigroup – was said to be delayed due to a declining euro, which is at a more than 11-year low versus the dollar. Proceeds from the sale would have been used to pay dollar-denominated debt.

iHeart is a San Antonio-based multimedia company.

MolyCorp bounces

MolyCorp’s 10% notes due 2020 got a sizable boost Monday as the company said production at its Mountain Pass, Calif.-based facility had almost doubled from the previous quarter.

A trader called the issue up “almost 7½ points” at 54½.

The Greenwood Village, Colo.-based rare earth metals mining company said that production at the facility in the fourth quarter came to 1,328 metric tons of rare earth oxide. In the third quarter, 691 metric tons had been produced.

The company said the increase in production was coinciding with an increase in demand.

“We were pleased to see our production increase in the fourth quarter relative to the preceding quarter and year on year,” said Geoff Bedford, president and chief executive officer, in a statement. “Optimization at Mountain Pass is ongoing, but our Q4 production demonstrates momentum in the right direction.

“Rare earth pricing softened in Q4 with market uncertainty surrounding release of final details of China's ongoing reforms to rare earth mining, separation and export regulatory policies. However, given the relatively strong internal and external demand we are seeing for many Mountain Pass products, continuing to boost production there is a top operational priority.”

RadioShack’s end nears

A trader said RadioShack’s 6¾% notes due 2019 rose 3 points in Monday trading, as the company continued talks with Sprint.

“They hadn’t traded in a long time,” the trader noted, pegging the notes at 15 5/8.

However, another trader said the debt was unchanged, trading in a 15 to 16 context.

Before the end of 2014, it was reported that the struggling Fort Worth, Texas-based electronics retailer was preparing a bankruptcy filing that would sell half of its store leases to Sprint. But new details came out Monday, indicating that the company planned to not only sell stores, but also close whatever remaining stores were left.

Still, a firm deal had not yet been reached, which could give another bidder an opportunity to step in and help the company stay operational.

Also in the retail space, a trader said Claire’s Stores Inc.’s bonds “continue to drift lower.”

He saw the 8 7/8% notes due 2019 ending around 68.

Another trader said the 7¾% notes due 2020 slipped half a point to 40.

Paul Deckelman contributed to this article

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