Distressed bonds end mixed; Stone Energy debt on the rise; Bon-Ton weakens as sale, leaseback nixed

By Stephanie N. Rotondo

Seattle, June 21 – While the broader markets were mostly firm on Tuesday – helped by easing fears of a Brexit – the distressed debt market finished a bit more mixed on the day.

On the upside, a trader said Stone Energy Corp.’s bonds have “been bouncing back.” The bounce continued into Tuesday trading, as the debt improved by at least 2 points.

But on the downside, Bon-Ton Stores Inc. paper was coming in after the company said late Monday that a planned sale and leaseback of three properties had been nixed.

The York, Pa.-based retailer did not give a reason for the cancellation, but did say that it came prior to due diligence.

Among distressed preferreds, Rex Energy Corp. said it was exchanging some of its 6% series A convertible preferred stock into equity.

The preferreds, which trade over the counter, were deemed steady day over day at $6.50. However, that was down from $6.98 at the open.

The stock (Nasdaq: REXX) was meantime off 4 cents at 76 cents.

Under the terms of the privately negotiated exchange, the company will issue 730,000 shares of common stock for 102,450 depositary shares representing a 1/100th interest in each preferred share, according to a regulatory filing.

Rex Energy is a State College, Pa.-based oil and gas exploration and production company.

Stone Energy powers up

Stone Energy’s 7½% notes due 2022 continued to rebound on Tuesday, market sources reported.

One trader said the issue moved up to 37¼, which compared to previous levels around 35. Another market source pegged the paper at 37 bid, 37¼ offered, up a deuce.

The Lafayette, La.-based oil and gas company missed a $29 million coupon payment on the 7½% notes on May 15. At that time, the company said it had sufficient liquidity to make that payment, but instead opted to enter the 30-day grace period in order to “assess its restructuring alternatives.” The company then entered into discussions with noteholders and creditors, but a deal was never reached.

On June 14, Stone said it made the missed coupon within the grace period, avoiding a default that could have ultimately resulted in a bankruptcy filing.

Bon-Ton takes a hit

Bon-Ton Stores’ 8% notes due 2021 dropped “3 and change points” on Tuesday, a trader reported.

He pegged the issue at 43 3/8.

Another source quoted the notes at 43 bid, 43 3/8 offered, down about 3 points for the day.

The weakness came as the retailer said a June 1 agreement to sell three stores to United Trust Partnership Fund for $45 million had been pulled.

The deal would have also allowed the company to lease back the properties for 20 years at $3.9 million per year.

Sale and leaseback agreements are one way cash-strapped retailers can quickly refill their coffers. Bon-Ton did one such deal last year, selling six properties to W.P. Carey Inc. for $84 million.

© 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.