Weatherford drops on bankruptcy filing; Endo lower after ratings downgrade

By James McCandless

San Antonio, July 1 – The distressed space started a new week with a focus on energy and pharmaceutical names.

Weatherford International plc’s notes dropped as the company filed for Chapter 11 bankruptcy after bondholders approved a restructuring plan.

As oil futures ended mixed, Ensco Rowan plc’s issues saw similar movement as Hi-Crush Partners LP’s paper declined and Chaparral Energy, Inc.’s notes rose.

Meanwhile, pharma name Endo International plc’s issues improved despite receiving a ratings downgrade.

Sector peer Teva Pharmaceutical Industries Ltd.’s paper was also moving higher.

Retailer PetSmart, Inc.’s notes shifted upward, continuing to ride high after a ratings agency raised its debt.

Revlon, Inc., another retail name, saw its issues trade mixed as a subsidiary enters into a $30 million credit facility.

Dairy name Dean Foods Co.’s paper fell as the company expanded its borrowing base under a revolving credit facility.

Weatherford drops

Oil and gas name Weatherford’s notes dropped on Monday, traders said.

The 9 7/8% senior unsecured notes due 2024 lost 1¾ points to close at 51 bid. The 9 7/8% notes due 2025 also fell 1¾ points to close at 50½ bid.

The notes combined to see about $24 million trading by day’s end.

On Monday, the Baar, Switzerland-based oilfield services provider filed for Chapter 11 bankruptcy after receiving approval for a restructuring plan from bondholders.

The company started soliciting approval for the plan on Friday.

Under the plan, unsecured noteholders would exchange $7.4 billion of senior unsecured notes for approximately 99% of the equity in the company and $1.25 billion of new tranche B senior unsecured notes, Prospect News reported.

The company indicated that a filing was coming in May, emphasizing that it wanted a quick process.

“It’s the highest profile oil and gas bankruptcy of the year so far,” a trader said.

Oil mixed

Another day of mixed oil futures begot similar results in distressed energy tranches, market sources said.

London-based contract driller Ensco Rowan’s issues were mixed.

The 5.2% senior unsecured notes due 2025 added 1¼ points to close at 75 bid. The 7¾% notes due 2026 declined by 1¾ points to close at 75¼ bid.

Houston-based energy logistics name Hi-Crush’s paper was in decline.

The 9½% senior unsecured notes due 2026 slid 1½ points to close at 68¾ bid.

Oklahoma City, Okla.-based independent oil and gas producer Chaparral’s notes were rising.

The 8¾% senior unsecured notes due 2023 tacked on ¼ point to close at 62 bid.

West Texas Intermediate oil futures for August delivery was 62 cents higher, settling at $59.09 per barrel.

North Sea Brent crude oil futures for August delivery finished the session at $66.50 after a 5-cent loss.

Endo off, Teva higher

Meanwhile, in the pharma space, Endo’s issues trended lower, traders said.

The 6% senior unsecured notes due 2023 shaved off ½ point to close at 71½ bid.

The Dublin-based pharmaceutical company received a ratings downgrade from Moody’s Investors Service on Monday.

The agency downgraded the ratings of Endo Luxembourg Finance I Co. Sarl and other subsidiaries, including the corporate family rating, probability of default rating and the speculative grade liquidity rating.

The outlook was revised to stable.

Moody’s cited the company’s likelihood of sustaining an elevated financial leverage through 2020.

Petach Tikva, Israel-based generic drug producer Teva’s paper moved higher.

The 3.15% senior unsecured notes due 2026 gained 1½ points to close at 78¾ bid. The 4.1% notes due 2046 garnered 2¼ points to close at 69 bid.

PetSmart up, Revlon mixed

Elsewhere, retailer PetSmart’s notes shifted upward, market sources said.

The 8 7/8% senior unsecured notes due 2025 added ½ point to close at 97½ bid. The 5 7/8% notes due 2025 rose ½ point to close at 97 bid.

The Phoenix-based pet supplies retailer’s structure has been on better footing after its e-commerce subsidiary, Chewy.com, went public and S&P Global Ratings recently upgraded the company’s first-lien debt and its senior unsecured debt.

“They will be trading at these levels for the foreseeable future,” a trader said. “With the Chewy deal, they now have an equity cushion that they can use to improve.”

New York City-based cosmetics producer Revlon’s issues saw a mixed day.

The 5¾% senior unsecured notes due 2021 improved by 1½ points to close at 90½ bid. The 6¼% notes due 2024 shed ¾ point to close at 68¼ bid.

The company announced on Monday that a subsidiary had entered a $30 million senior unsecured line of credit.

Dean Foods falls

Dean Foods’ paper saw a negative session, traders said.

The 6½% senior notes due 2023 fell 1¾ points to close at 54 bid.

On Monday morning, the Dallas-based dairy product producer announced that it had increased its borrowing base under its senior secured revolving credit facility to $265 million.

In the last few months, the company’s structure has been under pressure as the company conducts a strategic alternatives review.

A trail of disappointing quarterly results has led the company to consider its financial options, including an outright sale.

© 2015 Prospect News.
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