AK Steel trades off in wake of new issue; oil names slip with crude; Toys ‘R’ Us debt gets a boost

By Stephanie N. Rotondo

Seattle, June 14 – A distressed debt trader said the “whole market was down” on Tuesday, extending the arena’s recent string of losses.

In particular, the trader said that “miners and oil were really down.”

AK Steel Holdings Corp., for instance, was off about 2 points during the session. Those losses were likely due to the West Chester, Ohio-based steelmaker’s pricing of a $380 million offering of 7½% notes due 2023 late Monday.

The company plans to use those proceeds to fund a tender offer for its 8¾% notes due 2018.

As for the rest of the structure, the 7 5/8% notes due 2020 were called 2 points weaker at 87 at one shop. Another source placed the issue at 87½ bid, down over 2 points.

In the oil space, bonds were drifting lower along with oil prices, which continued to retreat from their recent highs above the $50-mark.

A trader said Chesapeake Energy Corp.’s 8% second-lien notes due 2022 dropped 2 points to 84¾. A second source saw the 6 5/8% notes due 2020 losing 3 points to close at 74 bid.

In Whiting Petroleum Corp. paper, the 5¾% notes due 2021 were seen trading off 2½ points to 86¾, while the 6¼% notes due 2023 fell 3½ points to 84.

Away from mining and energy, the retail space was getting some action.

Toys ‘R’ Us Inc. debt was bucking the day’s downward trend, rising on the back of refinancing news that came out late Monday. Neiman Marcus Group Inc. securities, however, took a hit after the company reported weak third-quarter results.

Toys rakes in the gains

Toys ‘R’ Us’ debt was boosted Tuesday by news out late Wednesday regarding a refinancing plan.

A trader said the 10 3/8% notes due 2018 jumped 8 points from early June trades to end at 99. The 8½% notes due 2017 were seen a shade higher at 98.

The trader also saw the 7 3/8% notes due 2018 rising “almost 7½ points” to 89.

“It’s been a month though” since the last round-lots trades, he said.

Another market source pegged the 7 3/8% notes at 89¼ bid, up nearly 9 points on the day.

As for the term loan B-4, it improved to 87½ bid, 89½ offered from about 84½ bid, 86½ offered, according to a trader.

The company disclosed on Monday that noteholders of about half of its $850 million in debt maturing in 2017 and 2018 have agreed to support the refinancing by participating in an exchange offer.

The plan is to refinance up to about 89% of the existing notes in the exchange offer.

Additionally, the company disclosed that a third party has agreed to purchase up to $50 million of new debt, subject to the successful completion of the exchange offer.

“This is an important step in refinancing the other bonds and loans in the structure because the 2017, 2018 maturity wall threatened to force the company into a free fall restructuring,” wrote Gimme Credit LLC analyst Kim Noland in a comment released Tuesday afternoon. “This all was likely made easier because of Toy’s improving results for the last holiday season and the 2015 fiscal year.”

Toys ‘R’ Us is a Wayne, N.J.-based toy retailer.

Neiman gets hit

Elsewhere in the retail world, Neiman Marcus’ debt gave up ground after posting disappointing quarterly results.

A trader saw the 8% notes due 2021 slipping a touch to 76 1/8, on “pretty heavy volume.” The 8¾% notes due 2021 lost over half a point, closing at 71 3/8.

The term loan B meantime dipped to 89½ bid, 90½ offered from 90 bid, 91 offered in reaction to the company’s third fiscal quarter results, a trader said.

For the quarter, the company reported total revenues of $1.17 billion, a decrease of 4.2% compared to total revenues of $1.22 billion in the third quarter of fiscal year 2015.

Same-store sales declined 5%.

Net earnings for the quarter were $3.8 million, down from net earnings of $19.8 million in the comparable period last year.

And, adjusted EBITDA for the quarter was $173.2 million, compared to $202.6 million in the prior year.

In August 2015, Neiman – owned by Ares Management LP and Canadian Pension Plan Investment Board – filed for an initial public offering. In October, it was reported that the IPO was pushed to 2016 as a result of volatile markets.

Neiman is a Dallas-based luxury retailer.

Sara Rosenberg contributed to this article.

© 2015 Prospect News.
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