American Tire notes improve as executives stay positive; Digicel issues gain as holders seek higher rate

By James McCandless

San Antonio, July 13 – Trading in the distressed debt market ended the week with steadily rising volume on Friday, with popular, news-driven names garnering the lion’s share of activity.

American Tire Distributors notes improved after company executives tried to reassure investors about future growth in a conference call.

Digicel Group Ltd. issues gained amid reports that bondholders are seeking an increase in the interest rate in some securities.

Intelsat SA notes were mixed as Standard & Poor’s issues ratings changes on the company and issue levels.

Frontier Communications Corp. notes were mixed to close the week. Chief financial officer Perley McBride tendered his resignation recently.

Sanchez Energy Corp. issues rose again. The company announced Tuesday that its chief operating officer had resigned.

PetSmart, Inc. paper was mixed. The company recently filed a lawsuit against a former loan agent.

American Tire up again

Huntersville, N.C.-based tire distributor American Tire issues improved again, traders confirmed, after the company held a conference call with investors to soothe concerns about its recent setbacks. Recently, Bridgestone ended its passenger tire distribution deal with the company and Goodyear made a similar move earlier in the year.

Executives promised that the company is poised for more growth and that development of new business is being aggressively pursued.

“There wasn’t much of substance on the call,” a trader said. “It was a short call with no specifics. I still think they need to explore a restructure.”

The 10¼% notes due 2022 gained 1¼ points to close at 29½ bid.

On Thursday, the 10¼% notes rose 1¾ points.

Digicel gains

Bermuda-based mobile phone network provider Digicel issues rose, market sources confirmed, as noteholders appeal to the company to increase the market interest rate on its 8¼ notes due 2020 to 30%. Investors are also concerned that the company will be unable to pay off its short-term debt.

“Those worries are driving those notes today,” a trader said. “Apparently they’re trying to come up with a plan to shore up their capital and calm people down.”

The 8¼% notes due 2020 jumped up 5½ points to close at 76¼ bid. The 7 1/8% notes due 2022 rose about 4½ points to close at 66½ bid.

Intelsat mixed

Luxembourg-based satellite communications company Intelsat paper was mixed, traders confirmed, as S&P lowered the company’s corporate credit rating and lowered its issue level rating on its 7¾% notes due 2021 (see related story elsewhere in this issue). Recently, the company announced that it would buy back said notes.

On Thursday, reports surfaced that the FCC is considering a rule change that would allow mobile providers to use airwaves currently limited to traditional broadcasters. The change could benefit satellite firms that manage the airwaves.

The 7¾% paper due 2021 were level at around 94½ bid. The 8 1/8% paper due 2023 picked up 1¾ points to close at 86 bid.

On Thursday, the 7¾% paper gained ½ point and the 8 1/8% notes rose 2½ points.

Volume names trade

Norwalk, Conn.-based wireline name Frontier Communications notes ended the week mixed. The company recently announced the resignation of CFO Perley McBride.

The 7 5/8% notes due 2024 gained about 2 points to close at 68¾ bid. The 10½% notes due 2022 lost ¾ point to close at 89¾ bid. The 11% notes due 2025 lost about ¼ point to close at 80 bid.

On Thursday, the 7 5/8% notes lost about 2 points, the 10½% notes rose about ½ point and the 11% notes gained about ¼ point.

Houston-based independent oil and gas producer Sanchez Energy issues rose. On Tuesday, the company announced the resignation of COO Christopher Heinson.

The 6 1/8% notes due 2023 traded up about 1¼ point to close at around 69½ bid.

On Thursday, the 6 1/8% notes gained about ¼ point.

Phoenix-based pet supplies retailer PetSmart paper was mixed. A recent lawsuit filed against former loan agent Citigroup over an alleged breach of contract has highlighted the animosity between the company and its creditors.

The 5 7/8% paper due 2025 was level at 77 ¾ bid. The 8 7/8% paper due 2025 rose ¾ point to close at 67 bid.

On Thursday, the 5 7/8% paper lost about ¼ point.

“Things were pretty quiet today,” a trader said. “But we had some good volume and I think there’s nowhere to go but up as we enter another earnings season.”

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