Weatherford notes tumble after earnings miss; Denbury issues decline on acquisition news

By James McCandless

San Antonio, Oct. 29 – A new week in the distressed space started quietly, with losses in topical names reported as third quarter results roll in.

Weatherford International plc’s notes saw a broad decline after the company announced disappointing third-quarter earnings results Monday morning.

Competitor Bristow Group Inc.’s notes also declined.

Elsewhere in the energy space, Denbury Resources Inc.’s issues also fell after announcing the planned $1.7 billion acquisition of Penn Virginia Corp., leaving investors concerned about a new entity’s potential debt.

On a negative day for oil futures, Sanchez Energy Corp.’s bellwether tranche followed suit while California Resources Corp. paper gained.

In retail, Neiman Marcus Group, Inc.’s notes were mixed after the company received a ratings downgrade.

Elsewhere in the sector, PetSmart, Inc.’s issues rose.

In telecom, Intelsat SA’s paper moved lower as the market anticipates the release of its third-quarter report Tuesday morning.

Meanwhile, insurance provider Genworth Financial, Inc.’s notes jumped as the company seeks regulatory approval for a buyout by a Chinese firm.

Weatherford slides

Weatherford’s notes were spotted declining at the start of a new week, traders said.

The 9 7/8% notes due 2024 fell 11¼ points to close at 76 bid. The 8¼% notes due 2023 lost about 4¼ points to close at around 80 bid.

The notes plunged after the Baar, Switzerland-based oilfield services provider issued its third-quarter earnings report Monday morning, showing a 10 cents per share loss against analyst estimates of a 13 cents per share loss.

The market focused on the company’s lagging revenues, reporting $1.44 billion for the third quarter.

“They were the focus of the day,” a trader said. “They say they’re going to be cash flow-positive next year, which sets them up for more scrutiny next quarter. That might not work out for them.”

Elsewhere in the sector, Houston-based offshore air services provider Bristow Group’s 6¼% notes due 2022 lost about ¼ point to close at around 75 bid.

Denbury weaker

Denbury Resources’ paper also traded lower, market sources said.

The 5½% paper due 2022 shaved off about 2 points to close at around 88½ bid. The 6 3/8% paper due 2021 dropped about 1 point to close at 96½ bid.

The Plano, Texas-based independent oil and gas producer announced that it would be acquiring Houston-based competitor Penn Virginia in a $1.7 billion cash and common stock deal, along with the assumption of its debt.

“A lot of the holders were miffed,” a trader said. “There was a conference call where the holders basically said that this doesn’t make any sense. They’re worried about what the debt situation is going to be.”

The terms of the deal would see Denbury issue 191.6 million new shares and pay $400 million in cash. JPMorgan Chase has committed to a new $1.2 billion senior secured bank credit facility to replace Denbury’s existing facility.

Sanchez down

Meanwhile, Houston-based producer Sanchez Energy’s 6 1/8% notes due 2023 lost about 1 point to close at 47 bid, following oil futures and extending a four-day run of losses.

After the close, the company announced that Howard Thill, its chief financial officer, would be resigning form the company effective immediately to be replaced on an interim basis by Cameron George, a senior vice president.

The company also granted its chief executive officer, Tony Sanchez III, the title of president and named two new independent directors to its board.

Los Angeles-based peer California Resources’ 6% notes due 2024 picked up about 1 point to close at around 83½ bid.

West Texas Intermediate crude oil futures ended the session 55 cents lower to $67.04 per barrel. North Sea Brent crude futures lost 8 cents to end at $77.54 per barrel.

Neiman Marcus mixed

Neiman Marcus’ paper was mixed, traders said.

The 8% paper due 2021 shed about ¾ point to close at 61½ bid. The 7 1/8% paper due 2028 added about ¾ point to close at 77½ bid.

The Dallas-based luxury department store chain was issued a ratings downgrade Monday by Standard & Poor’s. The agency lowered its credit rating, issue-level ratings, and affirmed a negative outlook.

“At this point, the market’s just waiting for a restructuring announcement,” a trader said.

Elsewhere in the sector, Phoenix-based pet supplies retailer PetSmart notes improved.

The 8 7/8% notes due 2025 picked up ¾ point to close at 71 bid.

Intelsat loses

In the telecom space, Intelsat’s notes declined, market sources said.

The Intelsat Jackson SA 5½% notes due 2023 lost about ¼ point to close at around 90 bid. The Intelsat (Luxembourg) SA 8 1/8% notes due 2023 fell about 1¼ points to close at 85¾ bid.

The market is anticipating the Tuesday morning release of the Luxembourg-based satellite name’s third-quarter earnings report, where the company is expected to report a 34 cents per share loss.

The 8 1/8% notes hit a bottom at 41 bid in February, climbing as high as 91 in recent weeks, according to Trace data.

Genworth jumps

Genworth’s paper saw a boost, traders said.

The 4.316% bonds due 2066 gained 6 points to close at 63½ bid.

Over the weekend, reports surfaced that the Delaware Department of Insurance has scheduled a hearing to consider the Richmond, Va.-based insurance provider’s proposed sale to China-based Oceanwide Holdings Group.

The potential acquisition was announced in October 2016 with the deadline for regulatory approval having been extended several times.

“Since then, this one has been flying under the radar,” a trader said.

© 2015 Prospect News.
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