Intelsat again active, weaker on amendment news; Consol Energy gains on asset sale; Federal-Mogul up

By Stephanie N. Rotondo

Seattle, Feb. 29 – Intelsat SA was once again the nom du jour in the distressed debt market during Leap Day trading.

The activity in the name came as the company sought to amend a credit agreement. The bonds initially moved up on the news, but then “reversed course,” according to a trader, ending down 4 to 6 points from the intraday highs.

The company’s term loan also retreated.

Meanwhile, Consol Energy Inc.’s debt performed well after the company announced an asset sale. Consol also announced that once the sale had closed, it planned to suspend its quarterly dividend on its common stock.

Meanwhile, Freeport-McMoRan Inc. debt continued to be actively traded, though not on any credit-specific news. Copper prices, however, did edge higher during the session, which could have been helpful to the country’s largest copper-mining company.

A trader said the 3 7/8% notes due 2023 gained 2½ points to close at 63¼. The 2 3/8% notes due 2018 rose nearly a deuce to 85. The 5.45% notes due 2043 added 5 points for the day, ending at 58, as the 3.55% notes due 2022 pushed up “4 and change” points to 66.

Intelsat debt declines

Intelsat bonds finished the day weaker after the company said it was looking to amend its senior secured credit facility.

One trader said there were “loads of trades” in the 5½% notes due 2023, which he saw closing off 2½ points at 63½. The 7¼% notes due 2019 meantime dropped nearly 3 points to 76¼, he said.

At another desk, a trader said the bonds closed off 4 to 6 points after initially heading higher on the news.

He said the 2019 paper traded up as high as 80, but ended up going out around 76. The 7¼% notes due 2020 traded up as high as 72 before coming back to end “closer to 66,” he said.

Meanwhile, subsidiary Intelsat Jackson Holdings SA saw its term loan moving lower as well.

The term loan was quoted at 89 bid, 90½ offered post-news, down from 90¾ bid, 91¾ offered in the morning and 90 bid, 91 offered on Friday, a trader said.

The trader explained that the debt had been stronger in the morning versus Friday’s levels as a result of an overall better tone in the market, but then fell below Friday’s levels once the amendment request was revealed.

Under the proposal, the company is seeking permission to permit second-lien pledges by Intelsat (Luxembourg) SA over the capital stock of Intelsat Jackson and technical changes confirming its existing ability to refinance term loans with other first-lien debt.

The proposed amendment also outlines that if Intelsat Jackson raises at least $450 million of gross cash proceeds of first-lien debt, the revolving credit commitment will be reduced to $350 million.

Intelsat is a Luxembourg-based provider of satellite services.

Consol selling assets

Consol Energy announced Monday that it was selling its Buchanan coal mine in West Virginia along with certain other metallurgical coal reserves for $420 million.

The bonds traded mixed in response to the news.

A trader said the 5 7/8% notes due 2022 gained “about 2 points” to 65¾. A second trader said the issue was “up a couple points” at 65½.

Another market source pegged the 8% notes due 2023 at 68 bid, up over 3 points on the day.

Consol is selling the assets to Coronado IV. Of the sale amount, $398 million will be in cash.

The company – which is looking to shed some of its coal assets to focus on natural gas – said the proceeds would be used to pay down debt.

Once the deal closes – expected in the first quarter – the company also intends to suspend its quarterly dividend in an effort to focus on its growth plans.

Federal-Mogul firms

Federal-Mogul Holdings Corp.’s term loans were higher in trading after the company revealed that Icahn, the owner of about 82% of the company’s outstanding shares of common stock, offered to acquire the remaining shares for $7 per share in cash, a trader said.

The term loan B was quoted at 85 bid, 90 offered, up from 83 bid, 87 offered, and the term loan C was quoted at 79 bid, 84 offered, up from 77 bid, 81 offered, the trader said.

Federal-Mogul said that it will appoint a special committee of independent directors who, in consultation with independent financial and legal advisers, will carefully review and evaluate the proposal.

Southfield, Mich.-based Federal-Mogul is a supplier of products and services to the manufacturers and servicers of vehicles and equipment in the automotive, light, medium and heavy-duty commercial, marine, rail, aerospace, power generation and industrial markets.

Sara Rosenberg contributed to this article.

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