Valeant Pharmaceuticals weighing asset sales; Intelsat reduces tender offer pricing; Caesars active

By Stephanie N. Rotondo

Seattle, May 18 – Trading in the distressed debt space pared down a bit Wednesday, as a new high-yield bond deal from Petróleo Brasileiro SA dominated the broader high-yield space.

On Tuesday, the state-controlled oil company sold $6.75 billion of five- and 10-year bonds. Petrobras also said that it planned to buy back up to $3 billion of debt maturing in 2018.

But in distressed dealings, Valeant Pharmaceuticals International Inc. was mostly better on news the company was considering asset sales in an effort to cut its debt.

Also active were Intelsat SA bonds, though they were trending lower on the day. The weakness came as the company extended its previously announced cash tender and also slashed pricing for the exchange.

Another notable name for the day was Caesars Entertainment Corp. Activity in that name has been limited since Caesars Entertainment Operating Co. filed for bankruptcy in January 2015. The uptick in trading came as the parent company said it would contribute about $4 billion to the bankrupt unit’s restructuring effort.

Valeant mulls assets sales

Valeant Pharmaceuticals is looking into the possibility of selling off its dermatology business, as well as its Provenge drug, a treatment for advanced prostate cancer.

Other sales of pharmaceutical assets – most of which have been acquired by the company in the last year or two – are also on the table, according to reports.

The potential sales are projected to bring in about $1 billion, which the company would use to cut its over $30 billion in debt.

The news gave the Canadian company’s bonds a boost.

A trader said the 6 ¾% notes due 2021 rose 1½ points to 87¼. However, he said the 6 1/8% notes due 2025 were unchanged at 82¾ – despite there being “tons of trades” in the issue.

At another shop, the 7½% notes due 2021 were seen inching up a point to 89 bid.

Intelsat amends tender offer

Luxembourg-based commercial satellite services provider Intelsat said Wednesday that it was extending the deadlines on its previously announced cash tender for three series of notes issued by its Intelsat Jackson Holdings SA unit.

Intelsat also said that it was reducing the amount of cash holders would receive for their debt.

The news did not bode well for the bonds.

One trader saw “a bunch of trades” in the 7¼% notes due 2019 – not an issue included in the tender. He said the paper fell almost half a point to 75½.

Another market source called the 6 5/8% notes due 2022 – the largest issue involved in the tender – down 3½ points at 68 bid.

The tender was first announced on May 12. The initial expiration date was June 9, but was moved back to June 14.

The early tender deadline was also pushed back, to May 31 from May 25.

For each $1,000 of notes tendered, the amount of cash holders of the 6 5/8% notes will receive was lowered to $687.50 from $740. The amount for the 5½% notes due 2023 was reduced to $677.50 from $730 and to $705 from $775 on the 7½% notes due 2021.

Caesars mixed, but busy

Caesars Entertainment-linked debt was trading more actively than it has of late, according to one trader.

The trader said the 11¼% notes due 2017 traded up 2½ points to 94.

“You never see those anymore,” he noted.

Activity in the company – as well as that linked to its subsidiaries – has been muted since the operating company filed for bankruptcy protections in January 2015.

Another source pegged the opco’s 10% notes due 2018 at 42½ bid, off almost a point.

The moves came as the parent said in court papers that it would give the bankrupt unit about $4 billion through cash, new debt and equity.

The announcement was made after creditors objected to a potential reorganization plan that failed to include how much the parent could be on the hook for.

A previous plan that would have split the opco into two units – one to continue as an opco and one to hold the real estate assets – has failed to garner the necessary support. That is because courts have ruled that the bankrupt entity has legal claims against its parent, as well as the private-equity owners, Apollo Capital Management and TPG.

© 2015 Prospect News.
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