Neiman Marcus notes rise on news of creditor agreement; PG&E issues up as investor lists board nominees

By James McCandless

San Antonio, March 1 – The end of the week in the distressed space saw more focus on names making news this week.

Neiman Marcus Group, Inc.’s notes were on the rise after the company announced an agreement in principle with its creditors to extend its debt.

Elsewhere in the sector, L Brands, Inc.’s issues were better while J.C. Penney Co., Inc.’s paper was negative.

Meanwhile, PG&E Corp.’s notes gained amid the backdrop of a large investor nominating its choices to replace the company’s current board of directors.

Hospital name Community Health Systems, Inc.’s issues were mixed amid a new issue trading and another asset divestiture.

In energy, California Resources Corp., Sanchez Energy Corp. and Ensco plc’s paper slid along with oil futures.

Hexion Inc.’s notes were trading lower.

Neiman Marcus up

Neiman Marcus’ notes were moving higher on Friday, traders said.

The 8% notes due 2021 added 2¼ points to close at 54¼ bid. The 8¾% notes due 2021 rose 2¾ points to close at 55¼ bid.

News broke on Friday that the Dallas-based retailer has reached an agreement in principle with a majority of its creditors on a framework of an “amend-and-extend” transaction, Prospect News reported.

The framework calls for three-year maturity extensions on its credit facilities and unsecured notes.

One highlight of the tentative deal is an exchange of $250 million in unsecured notes for $250 million of 10% cumulative MyTheresa preferred equity.

The company is currently in a legal battle with large investor Marble Ridge over last year’s private equity transfer of MyTheresa.

“It’s not set in stone but it’s very positive,” a trader said.

Retailers mixed

Elsewhere in the retail space, L Brands’ issues were also improving, market sources said.

The 6¾% notes due 2036 gained 1¼ points to close at 85½ bid. The 5¼% notes due 2028 rose ½ point to close at 87¼ bid.

This week, the Columbus, Ohio-based retailer posted its fourth-quarter earnings report.

While it showed a profit of $2.14 per share, which outpaced analyst estimates, it also registered a 5% drop in sales for its Victoria’s Secret segment.

Plano, Texas-based sector peer J.C. Penney’s paper moved in a negative direction.

The 8 5/8% paper due 2025 shaved off 1 point to close at 59 bid.

The company issued its earnings report for the quarter on Thursday, showing an 18 cents per share profit, beating predictions of 11 cents per share.

It also reported a 9.5% decrease in sales.

“There’s all this potential for a number of these troubled retailers to recover, but not everyone is going to get to,” a trader said.

PG&E gains

Meanwhile, PG&E’s notes gained, traders said.

The 6.05% notes due 2034 improved by 1 point to close at 92 bid.

On Friday, in anticipation of the San Francisco-based bankrupt electric utility’s May shareholder meeting, large investor BlueMountain Capital Management released its candidates to replace the company’s current board of directors.

BlueMountain submitted the names of 13 candidates, many with energy industry experience.

The company plans to retain five members of the board at the shareholder meeting on May 21.

Community Health mixed

In healthcare, Community Health’s issues were mixed by the end of the session, market sources said.

The 7 1/8% notes due 2020 moved up 1¼ points to close at 95¼ bid. The 8% notes due 2022 dropped 1 point to close at 80 bid.

Late in the day on Friday, the Franklin, Tenn.-based hospital operator announced the completion of its divestiture of four South Carolina hospitals.

The company continues to divest in properties as part of its debt reduction strategy.

On Thursday, it priced a $1.58 billion issue of 8% seven-year senior secured notes.

Energy names lower

Distressed energy tranches were moving lower with crude oil futures, traders said.

Los Angeles-based independent oil and gas producer California Resources’ paper slipped.

The 8% notes due 2022 lost 2 points to close at 78 bid.

In its Q4 earnings, the company reported a 53 cents per share profit for the quarter, far outpacing analyst predictions of a 2 cents per share profit.

Houston-based producer Sanchez Energy’s notes followed the negative trend.

The 6 1/8% notes due 2023 trended lower 1¾ points to close at 13½ bid.

London-based contract driller Ensco’s issues were in decline.

The 7¾% notes due 2026 shed ¼ point to close at 83¾ bid. The 7.2% notes due 2027 fell ½ point to close at 85 bid.

At the Friday close, West Texas Intermediate crude oil futures for April delivery lost $1.42 to end the session at $55.80 per barrel.

North Sea Brent crude futures for April delivery closed at $66.01 per barrel after a 2 cent dip.

Hexion lower

Hexion’s paper was trading lower, market sources said.

The 6 5/8% notes due 2020 lost 1 point to close at 84 bid. The 9% notes due 2020 ended 2 points worse off to close at 32 bid.

The Columbus, Ohio-based chemicals maker has been under pressure as second-lien holders organize in anticipation of the $2.4 billion in debt maturing in 2020.

“It’s been quiet for a bit, but these still trade every day,” a trader said.

© 2015 Prospect News.
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