Alta Mesa lower on SEC investigation; U.S. Steel negative after trade news

By James McCandless

San Antonio, May 20 – The distressed space spent Monday remaining settled on names that generated headlines last week.

Alta Mesa Resources, Inc.’s notes were headed lower after the company reported that it is under investigation by the S.E.C. for financial reporting issues.

Elsewhere in oil and gas, California Resources Corp.’s and Ensco Rowan plc’s issues mirrored oil futures’ mixed results as Weatherford International plc’s paper declined.

Meanwhile, United States Steel Corp.’s notes were negative after last week’s positive push as the United States and Canada agreed to end steel tariffs.

In the health space, Teva Pharmaceutical Industries Ltd.’s issues were under pressure a week after being named in an antitrust lawsuit.

Sector peer Endo International plc’s paper was also trailing.

Coming off of a ratings downgrade, Dean Foods Co.’s notes saw a slight improvement.

Retailer PetSmart, Inc.’s issues saw a negative session.

Alta Mesa lower

In the energy space, Alta Mesa’s notes moved lower, traders said.

The 7 7/8% notes due 2024 lost ¾ point to close at 38¾ bid.

After the close on Friday, the Houston-based independent oil and gas producer told investors that it was under investigation from the S.E.C after finding failures in its financial reporting and potential fraud.

The company says that it is cooperating with the investigation and is working to fix internal control and financial reporting problems.

“You have to remember that this company has only been around in its current form for about a year,” a trader said. “It’s a pretty remarkable downward spiral.”

It also acknowledged receiving a delisting warning from the Nasdaq on Friday.

Oil futures mixed

Elsewhere in oil and gas, mixed results in oil futures mirrored distressed oil tranches, market sources said.

Los Angeles-based producer California Resources’ issues were mixed.

The 6% notes due 2024 garnered 2½ points to close at 68 bid. The 8% notes due 2022, while reaching 1 point higher during the day, closed level at 79½ bid.

London-based contract driller Ensco Rowan’s paper also closed mixed.

The 5.2% paper due 2025 shaved off ¾ point to close at 75 bid. The 7¾% paper due 2026 added 1½ points to close at 84¼ bid.

Baar, Switzerland-based oilfield services provider Weatherford’s notes fell.

The 8¼ notes due 2023 dropped 3¾ points to close at 56¾ bid. The 9 7/8% notes due 2024 fell 1¾ points to close at 58¼ bid.

West Texas Intermediate crude oil futures for June delivery improved by 34 cents to end the session at $63.10 per barrel.

North Sea Brent crude oil futures for July delivery closed the day at $71.97 after a 24-cent loss.

U.S. Steel negative

Meanwhile, U.S. Steel’s issues saw a negative day, traders said.

The 6.65% notes due 2037 shaved off 2½ points to close at 85 bid. The 6¼% notes due 2026 lost ¼ point to close at 86½ bid.

The Pittsburgh-based steel producer has seen heightened activity after the United States, Mexico and Canada announced that it would suspend import tariffs on Mexican and Canadian steel.

Pending litigation in the World Trade Organization is expected to be scrapped.

Teva, Endo down

In the health care space, Teva’s paper saw more negative pressure, market sources said.

The 4.1% paper due 2046 fell 1¾ points to close at 67¼ bid. The 3.15% paper due 2026 slipped ½ point to close at 80 bid.

Last week, the Petach Tikva, Israel-based generic drugmaker came under scrutiny after news broke that 44 states had filed an antitrust lawsuit against the name and 19 other drug makers.

The states allege that the group acted as a “cartel” that kept prices artificially high and stifled competition.

Dublin-based sector peer Endo’s notes were also declining.

The 6% notes due 2026 lost ½ point to close at 75¾ bid. The 6% notes due 2025 dipped ¾ point to close at 70½ bid.

Dean Foods up

Dean Foods’ issues saw a slight improvement in Monday’s session, traders said.

The 6½% notes due 2023 added ½ point to close at 62½ bid.

On Friday, Moody’s Investors Service lowered the Dallas-based dairy product producer’s corporate family rating, probability of default rating and its senior unsecured notes rating.

The agency affirmed a negative outlook.

The company is currently conducting a strategic alternatives review after a series of disappointing quarters as sales decrease.

PetSmart drops

Retailer PetSmart’s paper ended the day negative, market sources said.

The 8 7/8% paper due 2025 dropped 1 point to close at 86 bid. The 5 7/8% paper due 2025 shed ½ point to close at 90 bid.

The Phoenix-based pet supplies chain recently filed with the S.E.C to launch a $100 million initial public offering for e-commerce segment Chewy.com.

The division was a source of contention between the company and its stakeholders in recent months after a large portion of it was transferred into private equity hands.

© 2015 Prospect News.
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