Acosta drops as earnings results spread; DISH lower as company opens patent lawsuit

By James McCandless

San Antonio, Jan. 30 – The distressed space began to shift its focus on Wednesday as earnings season actively begins to get underway.

Acosta Sales & Marketing Co.’s notes dropped sharply after news spread through the market of the company’s disappointing quarterly report.

Meanwhile, DISH Network Corp.’s issues went negative as the company opens a lawsuit against Univision Communications Inc. for patent infringement.

Mining name Samarco Mineracao SA’s paper started a recovery following significant crashes due to negative headlines regarding recent dam ruptures.

Sector peer Cloud Peak Energy Inc.’s notes were in decline as the company updates stakeholders on a strategic alternative review.

Elsewhere, PG&E Corp.’s issues were mixed in the backdrop of its first day post-bankruptcy filing.

Despite more gains for oil futures, Denbury Resources Inc.’s and Ensco plc’s paper was mixed while Sanchez Energy Corp.’s notes fell.

Retailer Neiman Marcus Group Inc.’s issues continued to rise as the market anticipates developments in its recent creditor dispute.

Acosta drops

Acosta’s notes took a sharp drop in the Wednesday session, traders said.

The 7¾% notes due 2022 dropped 6 points to close at 14 bid.

While not made immediately public, the market was abuzz over the Jacksonville, Fla.-based full-service marketing name’s release of its quarterly earnings report.

The company, owned by The Carlyle Group investment firm, released the latest in a series of disappointing numbers, reportedly posting a double-digit drop in revenue for the quarter.

“They’ve been leaking for a while,” a trader said. “It’s just a matter of time before they go for a restructure, but it’s tough to see what’s keeping them in business at all.”

Last month the company paid $3 million to settle a class-action lawsuit brought by former employees claiming they were owed overtime pay.

DISH off

Elsewhere, DISH’s issues were negative, market sources said.

The 7¾% notes due 2026 shaved off ¼ point to close at 85¼ bid.

On Wednesday, the Englewood, Colo.-based satellite TV provider announced that it had filed a patent infringement suit against Univision Communications.

The company claims that Univision violated adaptive bitrate streaming-related patents through the Univision NOW service.

Univision has denied the claims.

Samarco rises

In mining, Samarco’s paper was seen improving, traders said.

The 5¾% paper due 2023 picked up 1½ points to close at 62½ bid. The 4 1/8% paper due 2022 jumped 2¼ points to close at 59¾ bid.

The Belo Horizonte, Brazil-based mining name has seen a slight recovery after a recent substantial crash due to a series of mining dam ruptures.

On Sunday, a dam owned by co-owner Vale SA in the state of Minas Gerais collapsed, killing at least 65 people.

Both tranches, which closed in the mid-seventies context on Friday, crashed into the 50’s range as a result of the event by Monday’s market close, according to Trace data.

On Tuesday, the company revealed that it was holding advanced debt restructuring talks with its creditors, noting that the recent shift in bond prices may halt those talks.

“It’s an emerging market name, so it’s taken a while but it’s getting more attention on the domestic side,” a trader said. “Distressed guys are waking up to it.”

Cloud Peak lower

Sector peer Cloud Peak’s notes were lower, market sources said.

The 6 3/8% notes due 2024 declined by 1¾ points to close at 12½ bid. The 12% notes due 2021 shaved off 2¼ points to close at 44 bid.

News broke Tuesday that the Gillette, Wyo.-based coal producer has hired Centerview Partners to help in its strategic alternatives review.

The review began in November and was previously headed by JPMorgan Securities.

“It’s becoming a drawn-out process that doesn’t exactly show confidence,” a trader said.

PG&E mixed

Meanwhile, in utilities, PG&E’s issues were mixed, traders said.

The 6.05% notes due 2034, while being pushed lower to 86¼ bid, ended the day level at 88 bid, according to Trace data. The 5.4% notes due 2040 edged up ¼ point to close at 83¾ bid.

A day after the San Francisco-based utilities company made a long-anticipated Chapter 11 bankruptcy filing, it continued to garner headlines as it works through lawsuits brought by those affected by recent California wildfires.

On Wednesday, Moody’s Investors Service downgraded the company’s probability of default rating.

Fitch Ratings did the same, lowering its long-term issuer default rating.

“It’s going to be on everyone’s mind for the foreseeable future but it won’t trade as much because there’s only so many places it could go,” a trader said.

Oil names mixed

Despite oil futures making strides, distressed oil names saw mixed results, market sources said.

Houston-based independent oil and gas producer Denbury’s paper was mixed.

The 6 3/8% paper due 2021 lost 1¼ points to close at 83¼ bid. The 5½% paper due 2022 ticked up ¼ point to close at 73¼ bid.

London-based contract driller Ensco’s notes were also mixed.

The 7¾% notes due 2026 declined ¼ point to close at 81 bid. The 7.2% notes due 2027 rose ¾ point to close at 79 bid.

The company is in the midst of working to finalize a merger with sector peer Rowan.

Houston-based sector peer Sanchez Energy’s issues took a negative track.

The 6 1/8% notes due 2023 dropped 3¼ points to close at 17¼ bid.

West Texas Intermediate crude oil futures for March delivery gained 92 cents to close at $54.23 per barrel on Wednesday.

North Sea Brent crude futures for March delivery ended the session at $61.65 per barrel after rising 33 cents.

Neiman Marcus rises

Retailer Neiman Marcus’ paper continued to rise, traders said.

The 8% paper due 2021 tacked on 2 points to close at 44½ bid.

The Dallas-based luxury retailer’s paper extended its positive run to five days, gaining ½ point on Tuesday.

The market continues to watch the name as developments over its recent legal battle with creditors are expected to unfold soon.

“There’s been a bit of a hum around it over the last week,” a trader said. “Looking at the court schedule, something should be happening soon, so everyone’s on notice.”

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