Frontier gains on asset sale news; Teva loses in settlement reaction

By James McCandless

San Antonio, May 29 – In Wednesday’s activity in the distressed debt space, most of the attention was paid to telecom and pharmaceutical names.

Frontier Communications Corp.’s notes were gaining after the company announced an asset sale valued at over $1 billion.

Sector peer Intelsat SA’s issues closed mixed.

Elsewhere, in the pharma space, Teva Pharmaceutical Industries Ltd.’s paper declined as the market continues to react to its decision to settle an opioid lawsuit.

Meanwhile, drug maker Mallinckrodt plc’s notes fell a day after announcing that it would be spinning off its generic drugs business.

In the retail space, Bed Bath & Beyond, Inc.’s issues finished mixed after the company announced a deal with an activist investor group.

Energy names California Resources Corp.’s and Ensco Rowan plc’s paper saw mixed results again as Chaparral Energy, Inc.’s notes fell.

Exela Intermediate LLC, a subsidiary of Exela Technologies Inc., once again saw its issues make a modest recovery.

Frontier gains, Intelsat mixed

Frontier’s notes saw gains in Wednesday’s distressed session, traders said.

The 10½% notes due 2022 picked up 3¾ points to close at 72¼ bid. The 11% notes due 2025 rose 2¼ points to close at 65 bid.

$43 million of the 10½% notes exchanged hands.

Early Wednesday, the Norwalk, Conn.-based wireline communications company announced plans for a $1.35 billion asset sale.

The cash sale to WaveDivision Capital and Searchlight Capital Partners includes its assets and operations in Washington, Oregon, Idaho and Montana.

In a statement, chief executive officer Dan McCarthy said that the sale “reduces Frontier’s debt and strengthens liquidity.”

“It makes sense,” a trader said. “Anything they could do to throw money at the debt is always a boost.”

Luxembourg-based sector peer Intelsat’s issues closed mixed.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 shaved off ¼ point to close at 89¾ bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 added ¾ point to close at 74½ bid.

Teva, Mallinckrodt decline

Meanwhile, in the pharmaceutical space, Teva’s paper was declining, market sources said.

The 3.15% paper due 2026 dropped 1 point to close at 77¼ bid. The 4.1% paper due 2046 fell ½ point to close at 66¾ bid.

The market continues to react to the Petach Tikva, Israel-based drugmaker’s announcement that it would pay an $85 million settlement to the state of Oklahoma over accusations of playing a part in exacerbating the national opioid epidemic.

In response, an analyst at UBS downgraded the company, saying that its potential litigation costs could run into the billions.

The company is also embroiled in legal proceedings with United States health care authorities in an antitrust suit.

Elsewhere in the space, Staines-upon-Thames, England-based Mallinckrodt’s notes fell.

The 5¾% notes due 2022 lost ½ point to close at 81¾ bid. The 5½% notes due 2025 declined 1 point to close at 65 bid.

The company announced on Tuesday that it would spin off its generic drug unit by year’s end.

Bed Bath & Beyond mixed

Elsewhere, retailer Bed Bath & Beyond’s issues finished mixed, traders said.

The 4.915% notes due 2034 gave back ¾ point to close at 75¼ bid. The 3.749% notes due 2024, while being pushed lower to 92½ bid during the day, ended level at 94¾ bid.

After months of arguments, the Union, N.J.-based retailer announced that it had reached an agreement with a group of activist investors that had been pushing for the wholesale replacement of executives and board members.

The group, comprised of Legion Partners Asset Management LLC, Macellum Advisors GP LLC and Ancora Advisors LLC, said that it would be withdrawing its list of 10 candidates for a seat on the board of directors.

Instead, the group agreed to support the company’s nominees.

The company also agreed to form a committee to explore potential asset sales.

“Most of the time, these groups literally want a seat at the table,” a trader said. “In this case, it looks like making the CEO resign was enough for now.”

Former chief executive officer Steven Temares resigned under pressure earlier this month.

Oil futures lose

As oil futures fell, distressed energy tranches were not cohesive in their movements, market sources said.

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

The 6% paper due 2024 slipped 1 point to close at 64 bid. The 8% paper due 2022 gained 1½ points to close at 77 bid.

London-based contract driller Ensco’s notes also ended mixed.

The 5.2% notes due 2025 rose ¾ point to close at 71 bid. The 7¾% notes due 2026 fell ¾ point to close at 76¾ bid.

Oklahoma City, Okla.-based producer Chaparral Energy’s issues trailed ½ point to close at 59½ bid.

West Texas Intermediate crude oil futures for July delivery declined by 33 cents to close at $58.81 per barrel.

North Sea Brent crude oil futures for July delivery finished the session at $69.45 per barrel after a 66-cent drop.

Exela up

Exela’s paper continued to see upward movement, traders said.

The 10% paper due 2023 picked up 1¾ points to close at 82¾ bid.

The Irving, Texas-based business software name’s structure was trading at par at the beginning of the month. The company moved into distressed territory after a disappointing first quarter and a downgrade.

“After that drop, I think it’s going to settle in the 80’s for a while,” a trader said.

© 2015 Prospect News.
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