Intelsat lower after earnings release; Mallinckrodt drops as whistleblower lawsuit expands

By James McCandless

San Antonio, April 30 – The distressed space saw a boost of activity on Tuesday as several names released earnings reports.

Intelsat SA’s notes were lower after the company released its first-quarter report on Tuesday morning.

Sector peer Frontier Communications Corp.’s issues moved higher before it released its earnings report after the close.

Elsewhere, in health care, Mallinckrodt plc’s paper dropped after news broke that the Department of Justice is joining a whistleblower lawsuit against the name.

Connected commerce name Diebold Nixdorf, Inc.’s notes slid after it issued a worse-than-expected earnings report.

Meanwhile, in retail, Neiman Marcus Group, Inc.’s issues finished mixed as the company considers selling off e-commerce segment MyTheresa.

PetSmart, Inc.’s paper was similarly mixed a day after announcing its plan to take Chewy.com public.

Despite rising oil futures, Ensco Rowan plc and McDermott International, Inc.’s notes declined.

In shipping, Navios Maritime Holdings Inc.’s issues improved.

Intelsat lower

In the telecom space, Intelsat’s notes were trending lower, traders said.

Intelsat Jackson Holdings SA’s 5½% notes due 2023, while dropping into the 89 context, closed the day level at 90½ bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 lost 2 points to close at 75½ bid.

Both notes saw about $54 million trading by the close.

On Tuesday morning, the Luxembourg-based satellite operator released its first-quarter earnings report.

The company reported an 87 cents per share loss, worse off than the 67 cents per share loss that analysts expected.

It also posted revenues of $528.4 million for the quarter.

“This is worse than I expected, but I don’t think it’s as bad as it seems,” a trader said. “There’s still a lot of money plugged into it.”

The company’s structure has been under pressure as it waits for the U.S. government to provide clarity on the future use of the C-band spectrum and its resulting revenues.

Frontier up

Sector peer Frontier’s issues moved in the opposite direction, market sources said.

The 10½% notes due 2022 added 2¼ points to close at 75 bid. The 11% notes due 2025 picked up 1½ points to close at 66¼ bid.

The Norwalk, Conn.-based wireline communications name’s issues were headed higher before the company released its earnings report after the close.

It reported an earnings loss of 18 cents per share, beating analysts predictions of a 38 cents per share loss.

Revenues were reported at $2.12 billion, slightly lower from the same time last year.

Mallinckrodt drops

In the medical space, Mallinckrodt’s paper dropped, traders said.

The 4¾% paper due 2023 lost 4¾ points to close at 70½ bid. The 5½% paper due 2025 shed 3¼ points to close at 72 bid.

The U.S. Justice Department announced on Monday that it has joined two whistleblower lawsuits against the Staines-Upon-Thames, England-based pharmaceutical name.

The lawsuits stem from 2012 and 2013, when two employees filed suit against Questcor Pharmaceuticals, which Mallinckrodt eventually purchased.

Questcor was accused of defrauding government health-care programs by illegally marketing an expensive drug.

Diebold slides

Meanwhile, Diebold’s notes were on a downward slide, market sources said.

The 8½% notes due 2024 fell 1¾ points to close at 86¾ bid.

The North Canton, Ohio-based connected commerce solutions company was another name to report first-quarter earnings on Monday.

It posted a loss of $1.74 per share, far below expectations of a 35 cents per share loss that analysts expected.

Revenues were reported as a lackluster $1 billion.

The company’s structure had been on a positive course after an analyst upgraded the name.

“We expected bad but not this bad,” a trader said.

Neiman Marcus mixed

In retail, Neiman Marcus’ issues closed the session mixed, traders said.

The 8% notes due 2021 shaved off 1½ points to close at 55½ bid. The 7 1/8% notes due 2028 added 3½ points to close at 83½ bid.

On Tuesday, the Dallas-based luxury retailer announced that it would be considering a sale of e-commerce segment MyTheresa after reporting a sales loss.

The segment was at the center of a creditor dispute that led to litigation, with major holder Marble Ridge alleging that the company was in default when it was moved into private hands.

On Monday, the company announced offers to exchange any and all of its outstanding $960 million 8% senior cash pay notes due 2021 and $655,746,580 8¾%/9½% senior PIK toggle notes due 2021 for a combination of preferred stock and new notes due 2024, Prospect News reported.

PetSmart mixed

Elsewhere in retail, PetSmart’s paper was similarly mixed, market sources said.

The 8 7/8% paper due 2025 dropped ½ point to close at 89 bid. The 5 7/8% paper due 2025 added 1 point to close at 91½ bid.

The Phoenix-based pet supplies chain’s structure has seen increased attention after announcing that it had filed to launch an initial public offering for its e-commerce segment Chewy.com.

The segment, still to be majority owned by the company, was recently the subject of litigation with creditors after it transferred part of Chewy to private equity.

Oil names down

Despite modest gains for oil futures, distressed energy tranches were pushed lower, traders said.

London-based contract driller Ensco Rowan’s notes were negative.

The 7¾% notes due 2026 slid 3½ points to close at 86¼ bid. The 5.2% notes due 2025 fell ¼ point to close at 81 bid.

Houston-based oil and gas construction name McDermott’s issues were similarly under pressure.

The 10 5/8% notes due 2024 declined by 2 points to close at 90½ bid.

West Texas Intermediate crude oil futures for June delivery rose 41 cents to finish the session at $63.91 per barrel.

North Sea Brent crude oil futures for June delivery ended Tuesday at $72.80 per barrel after picking up 76 cents.

Navios better

Shipping name Navios’ paper was trending better, market sources said.

The 7 3/8% paper due 2022 rose 2 points to close at 65 bid.

The Monaco-based shipping company’s paper has been under pressure recently, though on little news.

“It’s relatively active, but there’s no real news on it right now,” a trader said. “It’s just one of those topical names that gets passed around.”

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