California Resources jumps as tender amount upped; Avaya pops on asset sale rumors; Intelsat softens

By Stephanie N. Rotondo

Seattle, Aug. 8 – The distressed debt market was looking at headlines on Monday and moving around positions accordingly.

California Resources Corp., for instance, announced that it had upped the amount of its previously announced cash tender offer to $750 million from $525 million.

In response, the 8% second-lien notes due 2022 were busy – and better – as the company increased the maximum amount of the third priority level cap to $375 million from $200 million.

Meanwhile, Avaya Inc. debt was trending toward the upside on reports the telecommunications services provider was looking at the possibility of selling its call center operations.

Aside from news-driven names, Intelsat SA paper continued to trade busily. However, the name’s recent run-up was stemmed as profit takers were coming in, according to a trader.

Another trader called the 7½% notes due 2019 nearly 2 points weaker at 78¾, while the 7¼% notes due 2020 dropped 2 points to 74½.

The 7¾% notes due 2021 were seen slipping half a point to 28¼.

CRC ups tender amount

California Resources’ debt was boosted Monday by news the Los Angeles-based oil and gas company had increased the size of a previously announced tender offer to $750 million from $525 million.

The increase came on the heels of the company’s pricing of a $1 billion term loan on Friday.

While the amounts and priority level for each of the four series of notes were left unchanged, CRC did increase the maximum amount of 8% second-lien notes due 2022 that it would take in to $375 million from $200 million.

A trader said the 8% notes traded up 4 to 5 points in response to “just above 60.” The 6% notes due 2024 were also 5 points better, at 47½, he said.

At another desk, a trader said the 8% notes were “quite active,” trading up over 4 points to 60½. The 5½% notes due 2021 were meantime seen a point higher at 51 1/8.

With the 5% notes due 2020 at the first priority level, the 5½% notes and 6% notes are the second level of priority, with the 8% notes making up the last level. For each $1,000 of notes tendered, holders of the 5% notes will receive $560 in cash, while holders of the 5¼% notes will get $540 and the 6% noteholders will get $510.

The 8% noteholders will receive $510 per each $1,000 of notes.

There is an early tender premium of $50 if holders tender by the early deadline of 5 p.m. ET on Aug. 12.

The offer expires 11:29 p.m. ET on Aug. 26.

Sale rumors boost Avaya

Rumors of a potential asset sale were pushing up Avaya’s bonds on Monday.

A trader said the 7% notes due 2019 rose 5 points to 80½.

“Wow, a bunch of trades,” he commented.

Another trader also placed the 7% notes around 80, calling that up “about 5 points.” The 9% notes due 2019 were “a touch higher.”

As for the 10½% notes due 2021, they were “all over the place,” according to the trader.

He said the bonds traded up into the 40s from the mid-20s previously, only to settle back in to be offered in the mid-30s.

The company’s term loans also saw considerable gains during the session.

The term loan B-3 was quoted at 88 bid, 90 offered, up from 80 bid, 82 offered, the term loan B-6 was quoted at 85 bid, 87 offered, up from 78 bid, 79 offered, and the term loan B-7 was quoted at 79½ bid, 81 offered, up from 74½ bid, 75½ offered, the trader said.

Avaya is reportedly in talks with Genesys Telecommunications Laboratories Inc. to acquire the company’s call center business. Avaya is hoping to receive more than $4 billion from such a sale.

Avaya has been struggling with a hefty debtload and has been looking at ways to improve its balance sheet, hiring Goldman Sachs Group Inc. to look into possible buyout interest and Centerview Partners Holdings LLC on “potential transactional alternatives.”

To that end, this isn’t the first time Avaya bonds have jumped on chatter of a potential sale. The debt improved as much as 8 points on May 23 when it was first reported that the company and its private equity owners were considering a sale of some or all of the company.

The company has a $73 million interest payment due Sept. 1, as well as $600 million that comes due October 2017.

Avaya is a Santa Clara, Calif.-based provider of business collaboration and communications services.

Sara Rosenberg contributed to this article.

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