Morning Commentary: Comstock Resources convertibles in focus on tender offer

By Abigail W. Adams

Portland, Me., July 13 – Comstock Resources, Inc.’s PIK convertible notes were in focus on Friday after the company announced a tender offer and consent solicitation for its 7.75% second-lien convertible PIK notes due 2019 and its 9.5% second-lien convertible PIK notes due 2020.

The 7.75% notes were among the top movers in the secondary space with the notes climbing about 2 points outright with trades between 101.75 and 102 with a yield of about 4.8% to 5%, sources said.

While Comstock Resources’ 7.75% notes were actively traded, the Frisco, Texas-based energy company’s 9.5% notes were quiet with the last trades seen at par, according to Trace data.

The tender offer is for the full outstanding amount of the notes with holders to receive $1,000 in cash per $1,000 principal amount plus accrued interest, according to an SC TO-I filing with the Securities and Exchange Commission.

The company is also soliciting consents to amend the notes’ indentures to make changes to the redemption provisions, release the liens on the collateral securing the notes and eliminate most of the covenants and default provisions on the notes, according to the SEC filing (see related story elsewhere in this newsletter).

While there was up to $95 million on the tape early in Friday’s session, trading was expected to quiet down in the afternoon with many getting their business done early ahead of the weekend, a market source said.

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