FirstEnergy notes up after deactivation notice; American Tire continues slide after Goodyear ends relationship

By James McCandless

San Antonio, April 25 – Traders reported increased activity in the distressed debt market on Wednesday amid earnings reports and other news-driven issues.

FirstEnergy Solutions notes gained again after the company announced that it has formally notified the government of its intention to deactivate three at-risk plants.

American Tire Distributor issues slid again after Tuesday’s announcement that its relationship with Goodyear had ended.

Sears Holdings Corp. paper traded down off Monday’s news that chief executive officer Eddie Lampert offered to purchase certain assets that have been on the market for two years.

Intelsat SA notes were up. Recently a subsidiary was chosen to contribute to a government project. Frontier Communications Corp. issues were mixed as the search for buyers for certain assets continues. Revlon, Inc. paper traded down elsewhere in the retail space.

FirstEnergy up

FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp. saw notes trade up Wednesday after the company filed a deactivation notice with the U.S. Nuclear Regulatory Commission, intending to permanently close two Ohio plants and one Pennsylvania plant barring federal assistance.

The Department of Energy is currently reviewing the request for assistance, though market sources doubt it will be granted. In a release, president of FES Generation Companies and chief nuclear officer Don Moul said that the company is actively seeking federal and state policy solutions to prevent the closures.

“Absent legislative or regulatory relief, we cannot continue to operate the plants on their current uneconomic basis,” Moul said.

The 6.05% notes due 2021 gained 1½ points to close at 46¼ bid. The 6.8% bonds due 2039 rose about ¼ point to close at around 45 bid. The 6.85% bonds due 2034 traded up 1½ points to close at 46 ½ bid.

On Tuesday, the 6.05% notes gained about ¼ point, the 6.8% bonds rose about ½ point, the 6.85% bonds gained ¼ point.

American Tire continues decline

Huntersville, N.C.-based tire distributor American Tire saw issues fall again, traders confirmed, on Tuesday’s news that Goodyear had ended its distribution agreement with American Tire after entering into a joint distribution venture with Bridgestone late last week.

The 10¼% notes due 2022 lost 6½ points to close at 42½ bid.

The 10¼% notes lost 39¼ points on Tuesday.

Sears off

Hoffman Estates, Ill.-based retailer Sears paper fell. On Monday, CEO Eddie Lampert announced his intention to purchase the Kenmore brand on behalf of his investment firm, ESL Investments, which holds a majority stake in the company. The brand had been listed for sale for two years.

The 6 5/8% notes due 2018 declined by about ¾ point to close at around 85¼ bid. The 8% notes due 2019 fell about 6 points to close at around 46 bid.

The 6 5/8% notes due 2018 rose about 3¾ points Tuesday.

Volume names trade

Luxembourg-based satellite communications company Intelsat notes traded up. A subsidiary was chosen for a satellite payload project for the Federal Aviation Administration recently.

The Intelsat Jackson SA 5½% notes due 2023 edged up ½ point to close at 84½ bid. The 7¼% notes due 2020 gained about ¾ point to close at around 98 bid.

Norwalk, Conn.-based wireline telecom name Frontier Communications issues were mixed as the company searches for buyers for certain assets.

The 7 5/8% notes due 2024 shaved off about ¾ point to close at around 64½ bid. The 10½% notes due 2022 rose about ¼ point to close at 87½ bid. The 11% notes due 2025 traded down about ¾ points to close at 76½ bid.

New York City-based cosmetics producer Revlon saw its 5¾% paper due 2021 dropped about ½ point to close at around 74¼ bid. The 6¼% paper due 2024 received downward pressure but remained level at around 61¼ bid.

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