Northern Oil improves as notes exchanged for stock; Community Choice issues up on debt restructure

By James McCandless

San Antonio, June 12 – The distressed debt market experienced another slow day on Tuesday, as names with news behind them drove trading.

Northern Oil and Gas, Inc. notes gained after the company announced the exchange of $20.95 million of its 8% senior notes due 2020 for stock in a debt reduction move.

Community Choice Financial Inc. issues rose after the company reached a debt restricting agreement with its largest noteholder.

Intelsat SA paper declined. On Monday, the company announced that it would buy back its 7¾% notes due 2021 using proceeds from common stock and convertible offerings.

Frontier Communications Corp. notes were mixed. The company recently failed to garner a satisfactory bid for its Florida assets. PetSmart, Inc. issues were up. Last week, the company hired debt advisers to help reduce its $8 billion debt. Mallinckrodt plc paper improved.

Northern Oil up

Minnetonka, Minn.-based independent oil and gas company Northern Oil and Gas notes rose, traders confirmed, after the company announced Tuesday that it had exchanged of $20.95 million of its 8% senior notes due 2020 for stock in a debt reduction move. The exchanges were carried out via two separately negotiated agreements with institutional holders (see related story elsewhere in this issue).

“They’ve been making a few steps this year to reduce their debt,” a trader said. “They’ve been working well with their creditors so far.”

The 8% notes due 2020 gained about 1½ points to close at around 97¾ bid.

Community Choice gains

Dublin, Ohio-based financial services name Community Choice issues gained, market sources confirmed, as the company reached a debt restructuring agreement with the largest holder of its existing notes. The restructuring will extend its debt maturities and allow it to execute its business plan.

Under the proposed terms, the company will carry out a rights offering in which existing noteholders will be offered new first-lien notes and warrants and an exchange that will allow noteholders to swap their securities for new PIK notes (see related story elsewhere in this issue).

The 10¾% notes due 2019 rose about 2½ points to close at 76¼ bid.

Intelsat off

Luxembourg-based satellite communications company Intelsat paper dropped, traders confirmed. On Monday, the company announced that it would buy back its Intelsat (Luxembourg) SA 7¾% senior notes due 2021. The company intends to purchase the notes using proceeds from an offering of $200 million of common shares and $300 million of convertible senior notes due 2025.

The 7¾% paper due 2021 lost 2¾ points to close at 92¼ bid. The 8 1/8% paper due 2023 fell about ½ bid to close at around 83 bid.

On Monday, the 7¾% paper rose 8 points and the 8 1/8% paper gained about 3 points.

Volume names trade

Norwalk, Conn.-based wireline name Frontier Communications notes were mixed. The company recently held a failed auction for its Florida assets.

The 7 5/8% notes due 2024 gained about ½ point to close at 69½ bid. The 10½% notes due 2022 dropped about 1½ points to close at around 89½ bid. The 11% notes due 2025 rose 1¾ points to close at 83 bid.

Phoenix-based pet supplies retailer PetSmart issues were up. Last week, the company hired investment bank Houlihan Lockey, Inc. as restructuring advisers for its $8 billion in debt.

The 5 7/8% issues due 2025 traded up ¼ point to close at 75 bid. The 8 7/8% notes due 2025 gained about ¼ point to close at around 58½ bid.

Britain-based drug maker Mallinckrodt saw its 4¾% paper due 2023 rise about 3½ points to close at around 83¾ bid.

“It was another quiet day, but there was a little more activity,” a trader said. “There were some spots of activity, but without some major news event there won’t be much more activity than this for the week.”

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