Penn Virginia numbers miss, bonds mixed; iHeartMedia rallies on possible asset sale news

By Stephanie N. Rotondo

Seattle, Nov. 10 – It was a mixed day for distressed debt on Tuesday as the market prepared to be closed for Veterans Day.

Following the trend of the day, Penn Virginia Corp. bonds were mixed in the wake of the company’s latest quarterly results.

Some iHeartMedia Inc. issues “bounced back” after falling since last week’s earnings release. A trader said the gain was due to news of possible asset sales in the United States.

Meanwhile, FMG Resources was “better by a few points,” according to a trader. The gains came after the company announced a tender offer for its 8¼% senior notes due 2019 and 6 7/8% senior notes due 2022.

Penn Virginia misses

Penn Virginia reported earnings after the market closed Monday. Come Tuesday, traders gave mixed reviews on the bonds’ performance.

One trader said the 8½% notes due 2020 gained a deuce, closing at 82½. However, he saw the 7¼% notes due 2019 falling a point to 27¾.

A second trader said the name was “active, but kind of unchanged. He pegged the 7¼% notes in a 28½ to 29 context.

For the third quarter, the Radnor, Pa.-based oil and gas company reported net income of $20 million, or 25 cents per share. That compared to a loss of $86.2 million, or $1.19 per share, the year before.

The swing to profit was attributed to a $44.6 million increase in operating income and $60.2 million in derivatives income.

On an adjusted basis, the company posted a loss of $43.3 million, or 60 cents per share.

Analysts had forecast an adjusted loss of 49 cents per share.

Revenue was $112 million, better than analysts’ forecasts of $91.21 million.

Penn Virginia altered its 2015 production guidance to 21,300 barrels of oil equivalent per day to 21,800 boepd. Production revenues are expected to be between $264 million to $269 million, compared to previous estimates of $284 million to $307 million.

iHeartMedia rebounds

A trader said iHeartMedia’s 10% notes due 2018 “rallied” from the mid-30s to 39 bid, 40 offered on Tuesday following reports the company’s Clear Channel Outdoor unit was considering selling some of its U.S. billboard assets.

The trader added that the other issues were not as active nor much moved on the news, speculating that the 10% notes gained because it was a “nearer-term maturity.”

Another trader said there were “over a dozen trades” in the 10% notes, which he said jumped 5 points to 39½. He also saw the 9% notes due 2021 ticking up slightly to 73, though the 9% notes due 2019 fell half a point to 76.

Reuters reported Tuesday that Clear Channel Outdoor had hired Moelis & Co. to advise it on a potential sale of billboards in cities such as Las Vegas, Seattle and Portland.

The news outlet cited “sources familiar with the matter.”

Proceeds from the possible sale are expected to be used to help pay down the company’s $20.6 billion in debt.

iHeartMedia is a San Antonio-based multimedia company.

FMG firms on tender

Australian iron ore producer FMG Resources announced a $750 million tender offer for its 8¼% and 6 7/8% notes on Tuesday.

In response, a trader said the 6 7/8% notes rose 4 points to 5 points to trade in the mid-70s. Another market source placed the issue at 76 bid, up 4½ points.

The cash tender is being conducted via a modified Dutch auction. Total consideration for the 8¼% notes will be $880 to $930 for each $1,000 of bonds validly tendered. For the 6 7/8% notes, the total consideration will be $750 to $800 for each $1,000 of bonds.

The total consideration will include $30 per each $1,000 of bonds if tendered by the early deadline of 5 p.m. ET on Nov. 24. The total consideration may also include a clearing premium.

The offer as a whole expires 5 p.m. ET on Dec. 9.

Essar falls on filing

Essar Steel Algoma Inc.’s 9½% notes due 2019 were trading around 9 on news that the company was seeking bankruptcy protections in both Canada and the United States, according to a trader.

The trader said the bonds had been trading closer to 20 prior to the news.

The company is seeking court protections due to a prolonged dispute with iron ore supplier Cliffs Natural Resources Inc. Cliffs had previously sued for damages from Essar, alleging violations of a supply contract. Essar in turn countersued, stating that it was Cliffs that first violated the agreements.

Hamilton hit by downgrade

Hamilton Sundstrand Industrial’s (Accudyne Industries Borrower SCA) term loan fell to 88 bid, 90 offered from 91 bid, 93 offered in reaction to downgrades from Moody’s Investors Service, a trader said.

The corporate family rating was cut to Caa1 from B2, the secured debt rating was lowered to B3 from B1 and the senior unsecured debt rating was revised to Caa3 from Caa1.

The trader remarked that CCC baskets in CLOs are at maximum capacity, and, as a result, there was selling in Hamilton Sundstrand after the downgrades were announced.

Moody’s attributed the downgrades to the expectation of high financial leverage – 9x through 2016 and into 2017 – at the company for some time due to an adverse operating environment from challenging end markets.

Hamilton Sundstrand is a Dallas-based manufacturer of flow control equipment and air compressors.

Sequa loan drops

Sequa Corp.’s term loan moved about in trading in reaction to quarterly earnings being released to lenders, according to a trader.

The debt was quoted on Tuesday by one trader at 76½ bid, 78½ offered and by a second trader at 76 bid, 77½ offered. Both traders said that prior to numbers coming out on Monday, the loan was quoted at 82 bid, 84 offered.

The second trader went on to remark that by the end of the day on Monday, the term loan had dropped as low as to be wrapped around 70, so it did spend Tuesday rebounding partially from those lows.

Sequa is a Tampa, Fla.-based diversified industrial company that operates in the aerospace and metal coatings industries.

Sara Rosenberg contributed to this article

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