Quicksilver bonds rise as company files for bankruptcy; MolyCorp stays weak; Claire’s improves

By Stephanie N. Rotondo

Phoenix, March 18 – The distressed debt market got a boost late in the midweek session after the Federal Reserve released its latest policy statement.

Upon the conclusion of its two-day policy meeting, the Fed opted to take out the word “patient” in terms of when it plans to raise interest rates.

The wording change caused many to speculate that a rate hike could take place as early as June. However, as the central bank noted that economic data – unemployment in particular – had room for improvement, others felt the hike would not occur until September.

Aside from the Fed announcement, several names were reacting to credit-specific news.

Quicksilver Resources Inc., for one, ended with a firmer tone as investors reacted to word of the company’s bankruptcy filing, which was announced late Tuesday.

Among other commodity names, MolyCorp Inc. debt remained weak. The bonds began to decline Monday after an auditor raised concerns about the company’s ability to continue.

In the retail space, Claire’s Stores Inc. was unchanged to better after the company reported earnings. On the opposite side, J. Crew Group Inc. fell after it posted its own quarterly results.

Quicksilver files for bankruptcy

Fort Worth, Texas-based oil and gas company Quicksilver filed for bankruptcy protections, the company said late Tuesday.

Come Wednesday, a trader said the 11% notes due 2021 were “pretty active,” rising 2½ points to 17¾.

Another trader said the issue was “a little bit better,” trading in a 17 to 18 context.

Quicksilver’s Chapter 11 filing comes after the company missed a Feb. 17 coupon on its 9 7/8% notes due 2019.

“Quicksilver’s strategic marketing process has not produced viable options for asset sales or other alternatives to fully address the company’s liquidity and capital structure issues,” chief executive officer Glenn Darden said in a press release published Tuesday.

“We believe that Chapter 11 provides the flexibility to accomplish an effective restructuring of Quicksilver for its stakeholders.”

Elsewhere in the oil and gas space, some names were gaining ground as oil prices raised in response to the Fed announcement.

West Texas Intermediate crude for April delivery ended up $1.65, or 3.8%, at $45.11 per barrel. Brent crude improved $3.14, or 5.87%, to $56.65.

A trader saw Samson Investments Co.’s 9¾% notes due 2020 rose half a point to 25.

In the preferred stock realm, Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP), for instance, closed up 83 cents, or 4.08%, at $21.15. Goodrich Petroleum Corp.’s 9.75% series D cumulative preferreds (NYSE: GDPPD) finished 39 cents, or 4.99%, higher at $.820.

In Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP), those closed up 46 cents, or 2.3%, at $20.49.

MolyCorp in retreat

Investors continued to react poorly to MolyCorp’s auditor’s comments regarding the company’s ability to go on as a going concern.

One trader said the 10% notes due 2020 fell 9½ points to 49½. Another trader said the issue was “volatile,” trading down to a low with a 47 handle, and ending “+/-50.”

The second trader noted that the level was down day over day.

On Monday, the rare earth minerals mining company posted a fourth quarter loss of $329.8 million – its 12th consecutive quarterly loss.

Revenue was $116.2 million.

Analysts polled by Thomson Reuters had forecast revenue of $104 million.

Cash flows were negative $75.8 million.

Gyrations in pricing and an increased level of cash burn have been blamed for the company’s troubles. Additionally, the company has about $1.7 billion in debt including $206 million of convertible notes that come due in 2016.

As of Dec. 31, MolyCorp had $211.7 million in cash and equivalents.

Claire’s ticks up

Claire’s Stores’ bonds were unchanged to better after the company reported its latest quarterly results.

At one desk, a trader said the 9% notes due 2019 inched up a touch to 92 3/8, while the 8 7/8% notes due 2019 gained over half a point to 62 5/8.

At another desk, a trader said the company’s debt was active, but “pretty much unchanged.”

He saw the 9% notes around 92 and the 8 7/8% notes at 61½ bid, 62 offered.

For the fourth quarter, Claire’s posted net sales of $412.4 million, down 5.3% from the previous year.

The decline was attributed in part to lower same-store sales and fewer open stores.

Consolidated same-store sales dropped 2.3%, with North American sales slipping 1.5% and Europe sales losing 3.8%.

Adjusted EBITDA was $84.7 million, compared to $95.7 million in the fourth quarter of 2013.

For fiscal 2014, net sales came to $1.5 billion, off 1.3% from fiscal 2013. Consolidated same-store sales weakened 2.2%, accounting for a 2.9% decline in North America and 1.2% in Europe.

Adjusted EBITDA was $248 million, down from $268.8 million the year before.

The retailer held a conference call Wednesday morning.

J. Crew swings to loss

J. Crew Group’s 7¾% senior PIK toggle notes due 2019 fell after the company released its latest earnings.

A trader said there was “lots of trading” in the issue, which fell 3 points to 84¾.

Another trader also deemed the debt active, calling the issue “down a couple” at 85.

The private retailer saw its fiscal fourth quarter sales slip 0.1% to $621 million. Same-store sales declined 5%.

Net loss was $30.6 million, which included a $26 million impairment charge. In the same quarter of the previous year, the company posted a profit of $5.9 million.

EBITDA fell to $42.1 million from $75.7 million.

Despite the sales slip, J. Crew did see a 3% gain in revenue, which came to $705 million.

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