Peabody loses ahead of restructuring; iHeart up on intraday swings; Neiman Marcus down on Q1 results

By Colin Hanner

Chicago, Dec. 13 – Movement in the distressed arena was focused on company-specific drivers on Tuesday, as movement ahead of one noteworthy restructuring stirred speculation on what’s to come.

The company in question is Peabody Energy Corp., the St. Louis-based coal company that is set to submit a restructuring plan on Wednesday. The company’s notes were down on the session after a Monday upswing.

Retailer Neiman Marcus Group Ltd. posted its fiscal first quarter figures on Tuesday, which showed a year-over-year loss amid reports of a faulty merchandising system hurting sales.

With the announcement that it will not repay $57.1 million of its senior notes held by Clear Channel Holdings, iHeartMedia, Inc. did not see as much movement as expected, traders said, seeing intraday fluctuation that rose later in the afternoon.

Several sector names, including Community Health Systems Inc., Concordia International Corp. and Valeant Pharmaceuticals International Inc., all saw downward movement.

Peabody down after gains

“It was hard to say what the driving force was behind it,” a trader said, referring to the about-face losses Tuesday after Peabody had gained during Monday’s session.

“There could be a lot of stuff going on behind the scenes, which could have spooked some guys out, or maybe it was trading off after the gains,” the trader said.

The trader also referred to Teck Resources Ltd., a Canadian metals and mining company, which announced that it settled on a benchmark price of $285 per ton for the first quarter of 2017 on several contracts, a figure that the trader called “bullish.”

Coal spot pricing continues to fall, the trader said.

On Tuesday, The Wall Street Journal reported that bondholders who want a stake in Peabody’s restructuring process are lifted by president-elect Donald Trump’s plan to nix the cap on greenhouse gas emissions put into action by the Obama administration, as well as the sharp rise in coal prices.

In distressed-land, the company’s 10% notes due 2022 were down 2½ points to 94½, and its 6½% notes due 2020 closed 3 points down to a “73 to 74” handle.

iHeart ‘not really off’’on news

Off news that it will not repay the $57.1 million of 5½% senior notes held by its Clear Channel Holdings, Inc. affiliate when they mature on Dec. 15, iHeartMedia’s bonds were “not really off,” said one trader.

Another trader said though the notes did not go out as low as expected, intraday fluctuation caused a flurry of, “trading down, then trading back up again.”

“Initially everything traded off, then everything traded back up and finished back up on the day,” the trader said.

A trader said the 14% notes due 2021 traded ¾ point higher to 38¼, while the 9% notes due 2019 were down ½ point to 77½.

The 10% notes due 2018 were down as low as a 63 handle but bounced back to go out at 68, around the same level they finished on Monday.

The 14% notes due 2021 followed with the intraday movement, going as low as 37 before shooting back up to a 40 zip code, a 1½-point increase on the day.

The company said the decision not to repay the notes was made by a special committee of independent directors as part of iHeartMedia’s ongoing effort to address its capital structure while maximizing the value of its assets.

While the $192.9 million of 2016 legacy notes held by other holders will be paid in full at maturity, the company said the $57.1 million balance held by Clear Channel will remain outstanding.

As a result, iHeartMedia said it will continue to have at least $500 million of legacy notes outstanding on Dec. 15 and will therefore not be obligated to grant additional security interests in favor of some of its debtholders under a so-called “springing lien.”

Neiman down on Q1 results

“Neiman was busy and active a bit,” a trader said, referring to the retailer’s announcement of its first quarter sales on Tuesday, which caused several of its notes to slide downward.

The company announced a loss of $23.5 million, a $13.5 million year-over-year widening, which was in large part due to an inventory management system implementation that botched tens of millions of dollars for the company.

“They had weak numbers,” another trader said.

A trader said the 8% notes due 2021 were down around 3 points to a 76 handle, while the 8¾% due 2021 notes “weren’t nearly as busy,” trading around a 70 handle, a 5-point decrease.

In healthcare

After announcing a small asset sale of two West-Coast hospitals, Community Health still saw a decrease in its 5 1/8% notes due 2018, which were down ¼ point to 98 5/8.

Valeant Pharmaceuticals’ 6 1/8% notes due 2025 were down ½ point to 75¾, a trader said, and Concordia International’s 9½% notes due 2022 were down 2½ point to 34 1/8.

Market round up

In oil, California Resources Corp.’s 8% notes due 2022 were up ½ point to 91 “on good volume,” a trader said. Oil retreated, albeit slightly amid news that U.S. crude inventories advanced last week.

Intelsat SA’s Jackson-linked 5½% notes due 2023 were up ½ point to 69½, a trader said.

And in coal, Murray Energy Corp.’s 11¼% notes due 2021 were up 3/8 point to 77¾.

Caroline Salls contributed to this review

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