J.C. Penney drops following CFO departure; FirstEnergy Solutions gains on bankruptcy deal

By Abigail W. Adams

Portland, Me., Sept. 28 – The distressed debt space rounded out a retail heavy trading week with a retail name in focus.

Attention turned to J.C. Penney Co., Inc.’s bonds during Friday’s session with the notes active and trading down 3 to 5 points after the departure of the company’s chief financial officer.

Sears Holdings Corp.’s soon-to-mature bonds recouped some of their losses from earlier in the week as investors continued to digest a debt restructuring proposal unveiled on Monday.

Meanwhile, Friday marked another strong day for oil and gas with oil futures again shooting up over $1.

As oil futures rose, so too did California Resources Corp.’s 8% senior secured second-lien notes due December 2022.

FirstEnergy Solutions Corp.’s 6.05% notes due 2021 were also on the rise in active trading on Friday with the notes climbing as much as 5 points after court approval of the company’s bankruptcy deal.

J.C. Penney in focus

J.C. Penney’s bonds were in focus and trading down on Friday after the departure of the company’s chief financial officer.

The retailer’s 8 5/8% notes due 2025 dropped about 3 points in high-volume activity.

The notes were seen at 66¾ bid, 67 offered on Friday. They were previously trading on a 69 handle, a market source said.

While not as active, the company’s 6 3/8% notes due 2036 were also down about 3 points to 40½ on Friday.

The company’s 5 5/8% notes traded down to 88¾. The notes were previously trading between 91 and 92, according to Trace data.

News broke Friday that CFO Jeffrey Davis was leaving the position he assumed a little more than one year ago.

The departure leaves the company without a CFO or a chief executive officer.

J.C. Penney’s bonds have been under pressure since mid-August when the company announced a dramatic earnings miss.

The company reported a loss per share of 38 cents for the second-quarter versus analyst expectations for a loss of 8 cents and slashed its forward guidance for 2018.

Sears rebounds

Sears’ soon-to-mature bonds rebounded on Friday as investors continued to digest a debt restructuring proposal unveiled on Monday.

Sears’ 6 5/8% notes due Oct. 15, 2018 recouped Thursday’s losses, closing the day at 88½, although in light trading volume.

The notes were down 2 points on Thursday.

The retailer’s 8% notes due Dec. 15, 2019 jumped about 5 points to close the day at 27½, according to Trace data. The notes were down 2¾ points on Thursday.

While up on Friday, the notes are still down on the week. The 6 5/8% notes opened the week around 95 and the 8% notes opened the week around 35.

Sears has been in focus in the space since chief executive officer Eddie Lampert announced a debt restructuring plan that included exchanging the company’s straight debt for convertible notes and selling $1.5 billion in real estate.

There is pessimism about the company’s ability to complete the exchange, sources said.

Oil on the rise

California Resources’ 8% senior notes due 2022 continued to make gains in active trading on Friday as oil futures again shot up more than $1.

The 8% senior notes were seen at 95 bid, 95½ offered early Friday, according to a market source. They continued to trade up into the afternoon and closed the day at 95 5/8.

The notes were up about 2½ points on the week.

Friday marked another strong day for crude oil. The barrel price of West Texas intermediate crude oil for November delivery rose to settle at $73.25, an increase of $1.13 or 1.57%.

Oil prices spiked amid speculation of tightening global supplies as Iranian oil exports decline due to U.S.-led sanctions.

FirstEnergy’s restructuring

FirstEnergy Solutions’ 6.05% notes due 2021 were on the rise on Friday with the notes gaining as much as 5 points in intra-day trading.

The 6.05% notes traded as high as 73 but closed the day around 71 3/8, according to Trace data. The notes were also up about 1½ point on Thursday to close the day at 69½.

FirstEnergy Solutions’ notes have been active and making gains since the U.S. Bankruptcy Court for the Northern District of Ohio approved a bankruptcy deal between the company and its parent, FirstEnergy Corp.

On the effective date of the plan of reorganization, FirstEnergy will pay the First Energy Solutions debtors $225 million and issue $628 million in new senior notes due Dec. 31, 2022, Prospect News reported.

© 2015 Prospect News.
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