American Tire notes gain again; Digicel issues slide amid noteholder demands of higher rates

By James McCandless

San Antonio, July 16 – The distressed debt market started the week in trading with more attention being paid to names that became active last week.

American Tire Distributors notes improved again after executives held a Friday conference call with investors, seeking to calm worries about future growth.

Digicel Group Ltd. issues reversed Friday’s gains spurred by reports that bondholders are seeking an increased interest rate in some securities.

Intelsat SA notes were mixed. Last Thursday, the Federal Communications Commission announced that it was considering a proposal to allow mobile operators access to part of the C-band spectrum.

Frontier Communications Corp. notes were mixed again. The company recently announced the coming departure of chief financial officer Perley McBride.

PetSmart, Inc. issues were mixed. The company recently filed a lawsuit against its former loan agent.

Sanchez Energy Corp. paper declined. The company announced last Tuesday that its chief operating officer had resigned.

American Tire gains

Huntersville, N.C.-based tire distributor American Tire notes rose, traders confirmed. On Friday, executives held a conference call with investors to downplay the recent losses in business after Bridgestone recently terminated its passenger tire distribution deal with the company. Goodyear ended a similar deal earlier in the year. The company said that it has no issues in developing new business.

“They way they’re talking, they’re looking to partner with someone quickly,” a trader said. “If they don’t announce something concrete soon, that may hurt them.”

The 10¼% notes due 2022 jumped up about 4½ points to close at around 34 bid.

On Friday, the 10¼% notes gained 1¼ points.

Digicel down

Bermuda-based mobile phone network provider Digicel issues fell, market sources confirmed. Last week, reports surfaced that noteholders were appealing to the company to increase the market interest rate on its 8¼ notes due 2020 to 30%. Investors are also worried that the company will have difficulty paying off its short-term debt.

“From what I hear, a plan to raise capital is in the works,” a trader said.

The 8¼% notes due 2020 dropped 1½ point to close at 73½ bid.

On Friday, the 8¼% notes rose 5½ points and the 7 1/8% notes due 2022 picked up about 4½ points.

Intelsat mixed

Luxembourg-based satellite communications company Intelsat paper was mixed again, traders confirmed. Last Thursday, reports surfaced that the FCC is weighing a rule change that would allow mobile providers to use airwaves currently limited to traditional broadcasters. As managers of the airwaves, the change could benefit satellite firms such as Intelsat.

Recently, the company announced that it would buy back its Intelsat (Luxembourg) SA 7¾% notes due 2021.

The 7¾% paper due 2021 traded up about ¾ point to close at 95¼ bid. The 8 1/8% paper due 2023 shaved off about ¾ point to close at around 85¼ bid.

On Friday, the 7¾% paper was level and the 8 1/8% paper gained 1¾ points.

Volume names trade

Norwalk, Conn.-based wireline name Frontier Communications notes were mixed. The company recently announced the coming departure of CFO Perley McBride.

The 7 5/8% notes due 2024 gained about ¼ point to close at around 69 bid. The 10½% notes due 2022 rose about ½ point to close at around 90¼ bid. The 11% notes due 2025 dropped about ½ point to close at around 79½ bid.

On Friday, the 7 5/8% notes gained about 2 points, the 10½% notes lost ¾ point and the 11% notes fell about ¼ point.

Phoenix-based pet supplies retailer PetSmart issues were mixed again. The company recently filed a lawsuit against former loan agent Citigroup over an alleged breach of contract concerning a contentious equity transfer.

The 5 7/8% issues due 2025 lost about ¼ point to close at around 77½ bid. The 8 7/8% issues due 2025 gained about 1 point to close at around 68 bid.

On Friday, the 5 7/8% issues were level and the 8 7/8% issues rose ¾ point.

Houston-based independent oil and gas producer Sanchez Energy paper fell. Last Tuesday, the company announced the resignation of COO Christopher Heinson.

The 6 1/8% notes due 2023 shaved off about 1¾ points to close at around 67¾ bid.

“All in all the start to the week wasn’t that eventful,” a trader said. “We had some steady volume, but nothing really outpaced Friday’s levels.”

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