PG&E lower as creditors propose restructure plan; GTT slides on analyst downgrade

By James McCandless

San Antonio, June 25 – As the distressed space moved into Tuesday, the focus fixed on utility and telecom names.

PG&E Corp’s notes ended the session lower after a group of bondholders proposed a rival restructuring plan as a counter to the company’s proposal.

In telecom, GTT Communications, Inc.’s issues slid after an analyst downgrade put pressure on the structure.

Sector peer Frontier Communications Corp.’s paper was also trailing.

Oil and gas name Denbury Resources, Inc.’s notes were mixed on the heels of a ratings change.

Amid another day of mixed oil futures, California Resources Corp.’s issues also ended mixed as Ensco Rowan plc’s and Sanchez Energy Corp.’s paper was under water.

Meanwhile, medical transporter Air Methods Corp.’s notes continued to drop as the prospect of more billing oversight hangs over it.

Pharma name Teva Pharmaceutical Industries Ltd.’s issues saw mixed activity.

PG&E lower

PG&E’s notes were seen moving lower throughout the session, traders said.

The 3¾% senior unsecured notes due 2042 lost 2¼ points to close at 88½ bid. The 3.95% notes due 2047 dropped ½ point to close at 91 bid.

On Tuesday, a group of the San Francisco-based bankrupt utility’s creditors led by Pacific Investment Management Co., Elliott Management Corp. and Davidson Kempner Capital Management filed a motion in bankruptcy court to prematurely end a period of exclusivity for the company.

The time frame gives the name the exclusive right to file a reorganization plan until Sept. 26.

The creditor group wants to file its own $30 billion plan to counter the one that the company has been floating in recent days.

While the PG&E plan calls for dual funds to handle past and future wildfire claims to the tune of $14 billion and $20 billion, respectively, the creditor plan pegs them at $18 billion and $4 billion.

The creditor plan also outlines an overhaul of management, a new board of no more than 11 members and real estate sales.

“They’ll be happy if they can extract their value,” a trader said.

GTT, Frontier slides

Elsewhere, in telecom, GTT’s issues were sliding, market sources said.

The 7 7/8% senior unsecured notes due 2024 fell 2¼ points to close at 83¾ bid.

The McClean, Va.-based cloud networking service provider’s issues were sliding on Tuesday after a Craig-Hallum analyst downgraded the name.

The analyst said that previous estimates of the company achieving modest growth in Q2 and Q3 are now expected for Q4.

The company’s structure has been under water since reporting an earnings loss and poor revenues.

Norwalk, Conn.-based wireline communications name Frontier’s paper was also declining.

The 10½% senior unsecured paper due 2022 shed 1¾ points to close at 66¼ bid. The 11% paper due 2025 declined by 1 point to close at 62 bid.

The company is currently considering how to manage its debt load, considering options from bankruptcy to out-of-court restructuring.

Denbury mixed

In oil and gas, Denbury’s notes closed mixed, traders said.

The 6 3/8% senior subordinated unsecured notes due 2021 tacked on 2 points to close at 82¾ bid. The 5½% notes due 2022 lost 1¼ points to close at 61¼ bid.

On Tuesday, Moody’s Investors Service changed the Houston-based independent oil and gas producer’s probability of default rating to B3-PD/LD from B3-PD, affirmed its corporate family rating and assigned a B3 rating to its new five-year notes.

The agency affirmed a stable outlook.

Oil mixed

As oil futures ended mixed again, energy tranches trended lower, market sources said.

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

The 6% senior unsecured notes due 2024 took off 2½ points to close at 60 bid. The 8% notes due 2022 gained 1 point to close at 74¾ bid.

London-based contract driller Ensco Rowan’s paper was shifting lower.

The 5.2% senior unsecured paper due 2025 fell 2½ points to close at 68½ bid. The 7¾% paper due 2026 lost ½ point to close at 73 bid.

Houston-based peer Sanchez Energy’s notes were also down.

The 6 1/8% senior unsecured notes due 2023 slipped ¼ point to close at 4¼ bid.

West Texas Intermediate crude oil futures for August delivery lost 7 cents to finish the day at $57.83 per barrel.

North Sea Brent crude oil futures for August delivery settled at $65.05 per barrel after a 19-cent gain.

Air Methods drops

Medical transporter Air Methods’ issues saw another drop, market sources said.

The 8% senior unsecured notes due 2025 shed 3 points to close at 54 bid.

On Monday, the 8% notes dropped 3½ points.

The Englewood, Colo.-based emergency transport name continues to languish as the United States Congress considers a proposal to ban balance billing, or “surprise billing.”

The practice routinely benefits emergency transport names who sometimes operate out of a patient’s network when providing services.

Teva mixed

In pharmaceuticals, Teva’s paper ended the session mixed, traders said.

The 3.15% senior unsecured paper due 2026 closed level at 76¾ bid. The 4.1% notes due 2046 dropped 4 points to close at 65 bid.

On Monday, the Petach Tikva, Israel-based generic drug manufacturer won court approval for its $85 million settlement with Oklahoma over an opioid lawsuit.

As part of the settlement, the company is barred from promoting opioids in the state until 2027.

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