L Brands notes higher after company makes asset sale; Ferrellgas issues gain on acquisition news

By James McCandless

San Antonio, Dec. 13 – Activity in the distressed space on Thursday turned largely positive.

L Brands, Inc.’s notes traded higher after the company announced that it had sold one of its clothing brands to a private equity firm.

Elsewhere in retail, PetSmart, Inc.’s issues declined while Revlon, Inc.’s paper ended mixed.

Meanwhile, propane name Ferrellgas Partners LP’s notes gained after the company announced the acquisition of Co-op Butane, Inc.

In the oil space, Parker Drilling Co.’s issues improved after the company filed for bankruptcy on Wednesday.

California Resources Corp.’s paper rose alongside oil futures as Sanchez Energy Corp.’s notes went negative.

Drug maker Mallinckrodt plc’s issues continued to drop.

Food and beverage name Dean Foods Co.’s paper rose.

Retail in focus

L Brands’ notes were moving higher Thursday, traders said.

The 6¾% notes due 2036 added ½ point to close at 87½ bid. The 6 7/8% notes due 2035 picked up ¾ point to close at 88 bid.

On Thursday, the Columbus, Ohio-based retailer announced that it would sell luxury lingerie brand La Senza to private equity firm Regent LP.

The sale caps a months-long effort to move the unprofitable brand off of its books.

The terms of the sale were not disclosed, but L Brands purchased the brand for $700 million in 2007.

Elsewhere in the retail space, Phoenix-based pet supplies retailer PetSmart’s 5 7/8% notes due 2025 lost 1¼ points to close at 73¾ bid.

New York City-based cosmetics producer Revlon’s paper ended the session mixed.

The 5¾% paper due 2021 traded down ¾ point to close at 81 bid. The 6¼% paper due 2024 ended level at 56¾ bid.

Ferrellgas gains

Meanwhile, Ferrellgas’ notes were also higher, market sources said.

The 6¾% notes due 2022 rose ¼ point to close at 85¾ bid. The 6¾% notes due 2023 added 1¼ points to close at 85½ bid.

The Overland Park, Kan.-based propane company announced on Thursday morning that it had acquired propane retailer Co-op Butane, Inc. for an undisclosed amount.

The company’s notes have been falling as it faces liquidity issues highlighted in a September earnings report.

In the last few months, the company has scrapped quarterly cash distributions and announced the resignations of its chief financial officer and its chief operating officer.

“All of the talk about Ferrellgas has been negative for what seems like a few months now,” a trader said. “They appear to be crashing in slow motion.”

Parker Drilling rebounds

Parker Drilling’s issues rose, traders said.

The 7½% notes due 2020 rose 2 points to close at 64 bid. The 6¾% notes due 2022 jumped 12 points to close at 63½ bid.

On Wednesday, the 7½% notes gained 2½ points and the 6¾% notes lost 3 points.

Also on Wednesday, the Houston-based drilling services provider filed for Chapter 11 bankruptcy after reaching a restructuring agreement with most of its creditors.

“There’s still a lot of volatility in these bonds,” a trader said. “You’d look away for five minutes and they’d be in a totally different place.”

Minor moves in oil names

Another day of rising oil futures saw similar movement in Los Angeles-based independent oil and gas producer California Resources’ paper.

The 6% paper due 2024 gained ½ point to close at 71½ bid. The 8% paper due 2022 rose ¼ point to close at 76¾ bid.

Houston-based sector peer Sanchez Energy’s notes slipped.

The 6 1/8% notes due 2023 shaved off ¼ point to close at 20½ bid.

West Texas Intermediate crude oil ended the Thursday session better by $1.43, closing at $52.58 per barrel. North Sea Brent crude closed the day at $61.45 per barrel after gaining $1.30.

Mallinckrodt slips

Mallinckrodt’s issues moved lower, market sources said.

The 4¾% notes due 2023 dropped 1 point to close at 72 bid.

The Staines-Upon-Thames, U.K.-based drug maker’s issues have sustained a negative trend upon increased attention.

Most recently, the Federal Drug Administration announced on Wednesday that it had withheld approval of an abuse-deterrent version of its opioid Roxicodone.

Despite the negativity, a market source said that the issues could be worse off if the company had not prioritized debt reduction in 2018, having paid off $700 million of its debt since the first quarter.

“I think as long as they keep making that their priority, they’ll come out better in the long run,” the trader said.

Dean Foods rises

Dean Foods’ paper saw a boost, traders said.

The 6½% paper due 2023 picked up 2¼ points to close at 87 bid.

The Dallas-based dairy products name has seen increased trading since reporting a 6 cent earnings loss and revenues of $1.89 billion last month.

“It’s trading a lot for no specific reason right now,” a trader said. “But from what I hear, people like the stock so maybe others see opportunity in the bonds.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.