Peabody Energy bonds beaten down; SandRidge retreats as oil slips; MolyCorp enters Chapter 11

By Stephanie N. Rotondo

Phoenix, June 25 – Peabody Energy Corp. was the big mover in the distressed debt arena on Thursday, as the coal producer’s debt fell 3 to 5 points.

One trader saw the 6% notes due 2018 closing at 51, a loss of 5 points. The 6¼% notes due 2021 were off 4 points at 36, while the 10% notes due 2022 – a $1 billion issue that priced at 97.566 in early March – declined 3 points to 63½.

Another market source placed the 6¼% notes at 38 bid, off 5 points on the day.

The drop came as a California legislative committee approved on Wednesday a bill that would require state pension funds to divest themselves of any coal investments.

Furthermore, it was also reported on Wednesday that Peabody’s equity (NYSE: BTU) was to be dropped from the S&P 400 MidCap index on Tuesday. The delisting comes after the stock was taken off the board of the S&P 500 index in September.

In response, the equity fell 18 cents, or 7.26%, to $2.30, on above-average trading volume.

The rest of the coal space was also weaker.

A trader said Arch Coal Inc.’s 7¼% notes due 2020 dipped nearly a point to 28 3/8, while Alpha Natural Resources Inc.’s 9¾% notes due 2018 slipped a quarter-point to 7¾.

SandRidge sinks

In the oil and gas sector, a trader said SandRidge Energy Inc. paper “appeared to be weakening at the end of the day.”

He called the 8¾% notes due 2020 down a deuce at 91 and the 7½% notes due 2021 off over a point at 44¾.

Another source pegged the 7½% notes at 45 bid, down a point.

There was no fresh news out on the Oklahoma City-based oil and gas company, but oil prices did continue to decline in Thursday trading.

West Texas Intermediate crude fell back below $60 a barrel, losing 63 cents, or 1.05%, to end at $59.64.

Brent crude declined 23 cents to $63.26.

MolyCorp files

Rounding out the commodity realm, MolyCorp Inc. filed for Chapter 11 protections on Thursday in order to implement a restructuring support agreement the company inked with holders of its 10% senior secured notes due 2020.

Not surprisingly, a trader said he didn’t see any round-lot activity in the bonds.

Under the terms of the restructuring agreement, the 10% noteholders will receive 100% of the new equity in the reorganized company. Holders of 2016, 2017 and 2018 convertible paper will have the right to participate in a rights offering for additional stock, provided the combined class agrees to support the reorganization plan.

Should those holders agree to the plan, any proceeds raised in the rights offering will be used to reduce the size of the company’s exit facility. If that facility is reduced to zero, the funds will be used to pay down any debtor-in-possession debt.

MolyCorp is a rare earth minerals mining company based in Greenwood Village, Colo.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.