PG&E rises after restructure plan floated; Teva mixed as settlement approved

By James McCandless

San Antonio, June 24 – The distressed debt space started off a new week with activity in the utility and pharmaceutical spaces.

PG&E Corp’s notes were on the rise as the company floats a plan to exit bankruptcy in March with dual funds for wildfire claims.

Meanwhile, in the pharma space, Teva Pharmaceutical Industries Ltd.’s issues closed mixed as its $85 million settlement with Oklahoma was approved in court.

Sector peer Mallinckrodt plc’s paper also finished mixed.

Medical transport name Air Methods Corp.’s notes continued to drop as legislation over balance billing hangs over the name.

In telecom, Frontier Communications Corp.’s issues were mixed as the company mulls restructuring options.

Satellite operator Intelsat SA’s paper declined.

As oil futures trade mixed, California Resources Corp.’s notes were similar while Ensco Rowan plc’s issues improved and Alta Mesa Resources, Inc.’s paper dipped.

PG&E rises

In utilities, PG&E’s notes were on the rise, traders said.

The 3¾% senior unsecured notes due 2042 tacked on 1¾ points to close at 90¾ bid. The 3.95% notes due 2047 rose 1¼ points to close at 91½ bid.

On Friday, news broke that the San Francisco-based bankrupt electric utility plans to put forward a $31 billion restructuring plan that would see them out of bankruptcy by March.

The plan includes a $14 billion fund that would address past wildfire claims and a $20 billion fund for future fires.

Concurrently, Governor Gavin Newsom of California has proposed a $21 billion state fund to assist in paying future wildfire claims.

“Besides all of the new paper out today, this is what was trading,” a trader said.

Teva, Mallinckrodt mixed

Meanwhile, in the pharma space, Teva’s issues closed mixed, market sources said.

The 3.15% senior unsecured notes due 2026 dropped 1¼ points to close at 76¾ bid. The 4.1% notes due 2046 added ½ point to close at 69 bid.

The Petach Tikva, Israel-based generic drug manufacturer had its $85 million settlement with the state of Oklahoma approved in court on Monday.

The settlement was reached after the state sued the name over allegations related to the propagation of the opioid epidemic.

Approval had previously been held up as the judge in the case became concerned over how the money would be spent.

As part of the settlement, the company is not permitted to promote opioids in the state until 2027.

Staines-upon-Thames, England-based sector peer Mallinckrodt’s paper was also mixed.

The 5½% senior unsecured paper due 2025 shed 1 point to close at 67 bid. The 5 5/8% paper due 2023 held level at 75¾ bid.

Air Methods drops

Helicopter name Air Methods’ notes saw another drop, traders said.

The 8% senior unsecured notes due 2025 declined by 3 points to close at 57¼ bid.

On Friday, the 8% notes dropped 3½ points.

The Englewood, Colo.-based emergency transport name’s structure is under pressure as the United States government considers legislation that would ban balance billing, the practice of billing a patient for out-of-network services that said patient had no previous knowledge.

“That kind of popped up last week and Air Methods got hit hard,” a trader said. “I can’t imagine how low it could go if it passes.”

Frontier mixed, Intelsat off

In telecom, Frontier’s issues ended the session mixed, market sources said.

The 10½% senior unsecured notes due 2022 shaved off ¾ point to close at 68 bid. The 11% notes due 2025 held level at 63 bid.

The Norwalk, Conn.-based wireline communications name is currently considering how to handle its debt problem.

Last week, Aurelius Capital Management wrote to the company arguing that it should consider an out-of-court debt exchange before entertaining the idea of filing for Chapter 11.

The asset manager says that bankruptcy would be detrimental for shareholders.

“There are some guys that want them to file tomorrow,” a trader said. “But most likely, we’ll probably see something in at least a few months.”

Luxembourg-based peer Intelsat’s paper declined.

Intelsat Jackson Holdings SA’s 5½% paper due 2023 slid ½ point to close at 91½ bid. Intelsat (Luxembourg) SA’s 8 1/8% paper due 2023 also lost ½ point to close at 78½ bid.

Oil futures mixed

As oil futures traded mixed, distressed oil tranches also saw non-cohesive movement, traders said.

Los Angeles-based independent oil and gas producer California Resources’ notes were mixed.

The 6% senior unsecured notes due 2024 saw a boost of 1½ points to close at 62½ bid. The 8% notes due 2022 slipped ¼ point to close at 73¾ bid.

London-based contract driller Ensco Rowan’s issues improved.

The 5.2% senior unsecured notes due 2025 traded up ¾ point to close at 71 bid. The 7¾% notes due 2026 added ¼ point to close at 73½ bid.

Houston-based producer Alta Mesa’s paper was losing.

The 7 7/8% senior unsecured paper due 2024 lost ¾ point to close at 38 bid.

West Texas Intermediate crude oil futures for August delivery ran up 47 cents to end the day at $57.90 per barrel.

North Sea Brent crude oil futures for August delivery finished the session at $64.86 per barrel after a 34-cent decline.

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