Cloud Peak drops on potential bankruptcy; Intelsat moves lower under increasing scrutiny

By James McCandless

San Antonio, March 18 – Shifting ground in the energy and telecom sectors drove Monday activity in the distressed space.

Cloud Peak Energy Inc.’s notes dropped as the company warned of a potential bankruptcy filing after skipping an interest payment.

In telecom, Intelsat SA’s issues moved lower as scrutiny increases over the potential regulatory framework surrounding the C-band spectrum.

Frontier Communications Corp.’s paper closed Monday mixed.

In energy, Bristow Group Inc.’s notes rose after receiving default waivers from two creditors on Monday.

PHI, Inc.’s issues saw a slight recovery after filing for bankruptcy on Friday.

California Resources Corp.’s paper was mixed, Halcon Resources Corp.’s notes improved and EP Energy Corp.’s issues were dragged down as oil futures pushed up.

Finance name Deutsche Bank AG’s paper was better after the company confirmed that it was engaging in merger talks with another bank.

Cloud Peak drops

Cloud Peak’s notes dropped during the Monday session, traders said.

The 12% notes due 2021 fell 1½ points to close at 30½ bid.

On Friday, the 12% notes lost 10¼ points.

The Gillette, Wyo.-based thermal coal producer announced on Friday that it would forego a $1.8 million interest payment, triggering a 30-day grace period before it is considered in default.

In a filing with the Securities and Exchange Commission, the company said that it would be evaluating alternatives with respect to the interest payment and would consider Chapter 11 bankruptcy if no solutions could be found.

The notes have been pushed further into distressed territory following a string of disappointing earnings reports and a strategic alternatives review.

“Most likely, they file when the 30 days is up,” a trader said. “Coal isn’t exactly the best place to be right now. It’s an even worse place to be if your position is selling coal to the types of power plants that have been closing recently.”

Intelsat off, Frontier mixed

Elsewhere, in the telecom space, Intelsat’s issues moved lower, market sources said.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 declined 1½ points to close at 89¾ bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 fell 4½ points to close at 74¼ bid.

The Luxembourg-based satellite operator’s structure continues to operate under scrutiny as uncertainty persists in how the U.S. government plans to regulate access to the C-band spectrum.

The original plan to let it and other companies sell access to mobile network providers has been stymied by some in the government who want to nationalize a portion of the revenues generated and not allow foreign-owned companies sell U.S. spectrum to U.S. companies.

“Some of its sheen has rubbed off,” a trader said. “But there’s still a lot of interest in it.”

Norwalk, Conn.-based sector peer Frontier’s paper ended the session mixed.

The 11% paper due 2025 shaved off ¼ point to close at 66¼ bid. The 10½% paper due 2022 picked up 1 point to close at 74¾ bid.

Bristow, PHI rises

In the energy space, Bristow’s notes rose, traders said.

The 6¼% notes due 2022 gained 3 points to close at 21½ bid.

On Monday, the Houston-based helicopter name reported that it had obtained waivers of potential defaults from two loan parties, Prospect News reported.

Under the agreements, the grace period concerning the two parties has been extended to April 15.

The company previously stated that it would be in default if it did not file its 10-Q for the quarter ended Dec. 31 before the grace period expired.

Lafayette, La-based offshore transporter PHI’s issues were also better.

The 5¼% notes due 2019 added ½ point to close at 58 bid.

On Friday, the company filed for bankruptcy after failing to address the maturity of the $500 million outstanding 5¼% notes, highlighted by a terminated October 2018 tender offer.

Oil names mixed

Distressed oil tranches saw non-uniform trading as oil futures improved, market sources said.

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

The 6% paper due 2024 gave up ½ point to close at 69 bid. The 8% paper due 2022 gained 2 points to close at 80 bid.

Houston-based producer Halcon’s notes improved.

The 6¾% notes due 2025 picked up 1½ points to close at 55 bid.

Houston-based sector peer EP Energy’s issues dragged.

The 9 3/8% notes due 2024 dropped 2¾ points to close at 26¼ bid. The 8% notes due 2024 lost 1¾ points to close at 49½ bid.

Last Thursday, the company reported a loss of 13 cents per share, matching analyst expectations.

West Texas Intermediate crude oil futures for April delivery added 57 cents to close at $59.09 per barrel.

North Sea Brent crude oil futures for May delivery ended the session at $67.54 per barrel after gaining 38 cents.

Deutsche Bank up

In the finance space, Deutsche Bank’s paper closed the day better, traders said.

The 4 7/8% paper due 2032 finished 1 point up to close at 89 bid.

Over the weekend, the Frankfurt-based financial services name confirmed that it has begun formal merger talks with German peer Commerzbank.

The company has been under pressure recently after failed recovery efforts and its involvement in a money laundering probe.

© 2015 Prospect News.
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