Sears notes drop as company eyes restructuring; Neiman Marcus declines amid dispute

By James McCandless

San Antonio, Sept. 24 – A new week in distressed debt trading saw another session focused on retail names.

Sears Holdings Corp.’s notes moved lower after the company announced it had received a restructuring proposal from CEO Eddie Lampert’s company.

Neiman Marcus Group, Inc.’s issues declined. On Friday, the company was accused of being in default after a recent private transfer of equity in a subsidiary.

California Resources Corp.’s paper ended mixed following a ratings upgrade on Friday.

Intelsat SA’s notes were mixed.

Frontier Communications Corp.’s notes declined elsewhere in distressed telecom.

American Tire Distributors’ paper was flat.

Sears notes sink

Sears’ notes shifted downward to start the week, a trader said.

The 6 5/8% notes due 2018 lost 1¾ points to close at 93 bid. The 8% notes due 2019 fell 1¼ points to close at 34 bid.

On Monday, chief executive officer Eddie Lampert announced a two-part plan to address the company’s debt. The plan involves options for restructuring its debt, swapping the debt for convertible securities, and selling $1.5 billion worth of real estate. Lampert advised the board that “immediate action” was needed to address the company’s financial situation.

“The move would look good, but there’s not a lot that can bring Sears back from the brink,” a trader said.

Sears is a Hoffman Estates, Ill.-based department store chain.

Neiman Marcus falls

Elsewhere in retail, Neiman Marcus’ notes weakened, according to a market source.

The 8% notes due 2021 lost 2½ points to close at 67 bid.

On Friday, the 8% notes rose ½ point.

Debt investor Marble Ridge claimed on Friday that the company was in default over its recent private transfer of equity in e-commerce segment MyTheresa.

The company disclosed the transfer as part of its recent earnings release, where the company reported rising sales and revenue and a net loss of $75.3 million for the fourth quarter of 2018. Adjusted EBITDA was $56.1 million for the fourth quarter and $477.1 million for the fiscal year.

Neiman Marcus is a Dallas-based luxury department store chain.

California Resources mixed

California Resources’ paper was mixed on Monday, traders said, with its bellwether 8% tranche following the trajectory of oil futures.

The 6% paper due 2024 dropped about 1½ points to close at 83½ bid. The 8% paper due 2022 added 1 point to close at 93 bid.

On Friday, the 6% paper rose 1½ points and the 8% paper added ½ point.

After the close Friday, S&P Global Ratings raised the company’s issue-level rating on its senior secured second-lien debt and revised the recovery rating on the debt to 2 from 4. The agency also affirmed the B issue-level rating on the company’s senior secured first-lien debt and the CCC- issue-level rating on its senior unsecured debt.

“They had a big day today, with the common stock rising as high as it did,” a trader said. “But energy’s cyclical, so eventually it’ll have to come back down.”

Volume names trade

Intelsat’s paper was mixed again.

The Intelsat Jackson SA 5½% paper due 2023 was level at 91¼ bid. The Intelsat (Luxembourg) SA 8 1/8% paper due 2023 lost 1 point to close at 86½ bid.

Elsewhere in the distressed telecom space, Frontier’s notes declined.

The 7 5/8% notes due 2024 lost 1¼ points to close at 64¾ bid. The 10½% notes due 2022 shed ¾ point to close at 89¼ bid. The 11% notes due 2025 lost ¾ point to close at 79¼ bid.

Meanwhile, Huntersville, N.C.-based tire distributor American Tire’s issues were still holding at last week’s level.

The 10¼% notes due 2022 were flat at 24½ bid.

“It looks like there’s a buyer for the bonds and they’re trying to keep it here,” a trader said. “They’re creating a floor.”

© 2015 Prospect News.
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