PG&E mixed after DIP financing secured; CBL drops, company settles class action suit

By James McCandless

San Antonio, March 27 – The middle of the week for the distressed space saw more focus on news-driven names.

PG&E Corp.’s notes were mixed after the company won access to debtor-in-possession financing in bankruptcy court.

Elsewhere, CBL & Associates Properties, Inc.’s issues dropped after the company settled a class action lawsuit and suspended its dividend.

In retail, J.C. Penney Co., Inc.’s paper was declining a day after the company announced that it has hired a new chief financial officer.

Sector peer Bed Bath & Beyond, Inc.’s notes continued to move higher while Neiman Marcus Group, Inc.’s issues fell.

Lower oil futures were the backdrop for EP Energy Corp.’s issues to trade similarly while California Resources Corp.’s and Halcon Resources Corp.’s paper improved.

Meanwhile, Intelsat SA’s notes trailed in the telecom space.

PG&E mixed

PG&E’s notes were mixed in the Wednesday session, traders said.

The 6.05% notes due 2034 added 2½ points to close at 97 bid. The 2.95% notes due 2026 lost ¼ point to close at 84¾ bid.

The San Francisco-based bankrupt electric utility won access to $5.5 billion debtor-in-possession financing in bankruptcy court on Wednesday.

The company filed for Chapter 11 bankruptcy in January after wildfires exposed the name to outsized liability charges in the billions.

While working through bankruptcy court, the company faced calls to reform its safety protocols, work with California legislators to enact tighter controls and concerns that more wildfires could see it return to its original position.

CBL drops

Meanwhile, CBL & Associates’ issues saw a large drop, market sources said.

The 5.95% notes due 2026 declined by 7 points to close at 70¾ bid. The 5¼% notes due 2023 dropped 4½ points to close at 76¾ bid.

On Wednesday, the Chattanooga, Tenn.-based retail-focused real estate investment trust announced that it had settled a class action lawsuit brought by a group of its tenants for $90 million.

The tenants alleged that the company had consistently overcharged them for electricity costs.

Concurrently, the REIT also said that it would be suspending distribution of its dividend for two quarters.

“They seem pretty shaky if they have to do that,” a trader said. “With that in mind, a lot of people pounced on this one.”

J.C. Penney off

In the retail space, J.C. Penney’s paper skewed negative, traders said.

The 8 5/8% notes due 2025 shaved off ¼ point to close at 59¾ bid. The 5 7/8% notes due 2023 gave back 1¼ points to close at 83½ bid.

After the close on Tuesday, the Plano, Texas-based department store chain appointed Bill Wafford as its new permanent CFO, concluding a months-long search that began in October 2018.

Wafford was most recently the CFO of retailer Vitamin Shoppe, Inc..

The company has been on shaky financial ground in the last year as it made a transition to Jill Soltau as its new chief executive officer in October.

It also received a positive boost after beating earnings expectations for the fourth-quarter.

BB&B gains, Neiman loses

Elsewhere in the sector, Bed Bath & Beyond’s notes continued to push higher, market sources said.

The 5.165% notes due 2044 added 2¼ points to close at 77¾ bid. The 4.915% notes due 2034 jumped 3 points to close at 80 bid.

On Tuesday, the 5.165% notes rose 3 points and the 4.915% notes moved up 2 points.

The Union, N.J.-based retailer’s structure saw broad positivity after a group of activist investors disclosed a 5 percent stake in the name and demanded the replacement of its chief executive officer and board of directors, citing a widespread lack of sector experience.

It also wants the company to explore asset sales.

The company responded by saying that the suggestions were welcome and many of the solutions that the group had proposed were already being considered.

Dallas-based luxury retailer Neiman Marcus’ issues declined.

The 8% notes due 2021 shed 2 points to close at 51½ bid.

The company announced recently that it had reached a deal with a majority of creditors to extend the maturity date of its debt by three years.

It will also conduct an exchange offer for a stake in e-commerce segment MyTheresa in April.

Oil pushes down

A negative day for oil futures led to non-uniform activity in popular distressed oil names, traders said.

Houston-based independent oil and gas producer EP Energy’s paper closed the session mixed.

The 6 3/8% paper due 2023, while moving as high as 23 bid during the day, closed level at 21 bid, according to Trace data. The 8% paper due 2024 lost ¼ point to close at 54¾ bid.

Los Angeles-based producer California Resources’ notes moved upward.

The 6% notes due 2024 added 2 points to close at 67¼ bid. The 8% notes due 2022 picked up 1½ points to close at 81½ bid.

Houston-based peer Halcon’s issues were similarly positive.

The 6¾% notes due 2025 rose 1 point to close at 61 bid.

West Texas Intermediate crude oil futures for May delivery finished the session 53 cents lower at $59.41 per barrel.

North Sea Brent crude oil futures for May delivery closed at $67.83 per barrel after a 14-cent loss.

Intelsat trails

In telecom, Intelsat’s paper saw a negative day, market sources said.

Intelsat Jackson Holdings SA’s 5½% paper due 2023 moved down ¼ point to close at 88¼ bid. Intelsat (Luxembourg) SA’s 8 1/8% paper due 2023 fell ½ point to close at 68¼bid.

The Luxembourg-based satellite operator has been pushed further into distressed territory as uncertainty surrounds the U.S. government’s potential role in expanded use of the C-band network.

The potential of the government claiming a portion of the potential revenues from the expansion has led some to sour on the name.

“Bottom line on a lot of this is that the government doesn’t move at the same speed as the market,” a trader said. “It’s frustrated a lot of people who’ve sunk a lot of money into Intelsat.”

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